Dark clouds hang over Driftwood LNG
Doubts are cast on Tellurian’s ability to complete the Driftwood LNG project on time, or at all, after the company withdrew a proposed public offering which could have raise $1 billion, and later cancelled two sales agreements (SPAs) with Shell and Vitol. CEO Octávio Simões said the public offering was called off due to “uncertain conditions in the high-yield market.” Instead, Tellurian is now looking for equity partners to help finance the project. “The potential corporate and strategic partners we are seeking may want liquefied natural gas volumes that they can sell globally and now we have some capacity to offer that option,” he said. The search for new partners may slow down the project. “It sets us back, definitely. It puts in jeopardy the ability to deliver gas on the schedule that we were hoping to stick to,” explained Chairman Souki. In another blow, Tellurian said that three SPAs covering offtake from Driftwood had been terminated: notable two 3 mtpa deals with Shell and one with Vitol for the same amount. Shell ended its SPAs, while the Vitol agreement was cancelled by Tellurian, according to a regulatory filing. Construction on Driftwood LNG is progressing, funded by Tellurian’s cash and operating cash flow – notably from the Haynesville shale gas sale. CEO Simões also aims to raise $1 billion by selling bonds but the main focus is now to find a strategic investor for the $12 billion project, planned to be operational in 2026 and with regulatory approvals for 27.6 mtpa of output.