LNG

Tellurian Inc., the US developer of the Driftwood LNG export project at Lake Charles in Louisiana, has signed its first landmark LNG supply deal with international commodities company Gunvor to give the joint venture momentum.

Gunvor trades in energy from its main offices in cities such as Geneva in Switzerland, Singapore, the Chinese city of Shanghai and Houston in Texas and its agreement with Tellurian was signed by Gunvor Singapore Pte Ltd.

Tellurian's transaction with Gunvor is a sales and purchase agreement (SPA) for 3 million tonnes per annum of cargoes for a period of 10 years,

“The volumes will be indexed to a combination of two indices, the Japan Korea Marker (JKM) and the Dutch Title Transfer Facility (TTF), netted back for transportation charges,” said Tellurian.

The LNG would be delivered on free-on-board (FOB) basis from the Driftwood facility, the project on the Gulf Coast with proposed total output of 27.6 MTPA.

The Gunvor’s global commodities business already involves almost 18 MTPA of traded LNG cargoes.

“Tellurian intends to market up to 10 MTPA of LNG in our first phase on a JKM, TTF or blended price basis, as our integrated model provides the flexibility to offer this valuable product,” explained Tellurian President and Chief Executive Octávio Simões.

“We welcome Gunvor, the largest independent global trader of LNG volumes, to Driftwood and look forward to providing a cleaner fuel to meet growing global energy needs,” stated Simões.

Tellurian had hinted in its first-quarter earnings report at the start of May 2021 that the improving market favoured the signing soon of supply agreements.

The Houston, Texas-based company said it continued to build its Gulf Coast natural gas business and had concentrated on paying down debt.

The overall project plan for Tellurian now is for the Driftwood liquefaction plant to have first-phase production of 16 MTPA, rising to over 27 MPTA with expansions.

Tellurian produced 3.3 billion cubic feet of natural gas for the quarter in the Haynesville shale basin in north Louisiana.

Tellurian’s upstream assets include 9,704 net acres and interests in 72 producing wells.

The company ended the first quarter with around $58.7M of cash and cash equivalents and generated $8.7M in revenues from natural gas sales.

Tellurian added that it still had a strong balance sheet consisting of around $270.3M in total assets.

Charif Souki, the Executive Chairman of Tellurian, said in a presentation last month that the use of the gas-fired power option was growing in Asia and his company hoped to start finalising commercial agreements based on the current “very strong gas market fundamentals” in Asia and Europe.