Tellurian is to start the full construction of its Driftwood LNG export terminal in Louisiana in April.
This is regardless of whether the company has sufficient financing in place by that time to complete the first phase of the project, Executive Chairman, Charif Souki, said in a podcast posted on the company's website on Monday.
Souki also said that discussions with banks on finance may extend “a little bit longer.”
"It is critical to get it right for the value of the shareholder, so we're not going to rush through that process," Souki said. "We're very comfortable starting the construction programme without being completely sure that the financing will be put in place."
Following 10-year agreements with Gunvor, Vitol and Shell, Driftwood’s total offtake commitments stand at 9 mill tonnes per year, which is enough for the project’s two-plant first phase. Each plant is expected to have up to four liquefaction trains, giving a total design capacity of up to 27.6 mill tonnes per year.
The offtake deals were indexed to a combination of Platts JKM and the Dutch TTF European gas hub contract, netted back for transportation charges.
LNG would be delivered free-on-board (FOB) from Driftwood. Tellurian intends to produce its own feedgas for the first phase of the terminal but currently it is well short of the upstream production necessary to guarantee that.
The shorter length of Tellurian's commercial deals than the traditional 20-year agreements that were used to finance the first wave of US liquefaction terminals and the pricing mechanisms underlying the company’s agreements have raised questions in the market about the company's ability to obtain financing, S&P Global Platts said.
Souki tried to allay those concerns in the podcast, while at the same time acknowledging that Tellurian may have to use available cash and lines of financing to pay contractor Bechtel, while talks over the amount of money that would be needed to finish the first phase of the project continued.
"We now have a number of banks that are willing to consider a project like this," Souki said. "We feel very confident and comfortable that this will be done."
Following this podcast, uncertainty remained over whether and when Tellurian would announce a formal final investment decision (FID), in line with the traditional practice of US LNG exporters and the same process Souki employed when he was CEO of Cheniere Energy, a company he co-founded and led in the run-up to its flagship Sabine Pass terminal beginning exports in 2016, Platts said.
Regarding Driftwood LNG, Souki claimed that FID “doesn't apply here.”
