Houston-based natural gas company Tellurian announced today it signed a long-term agreement with Switzerland-based energy trader Vitol. Accordingly, this deal consists of a ten-year agreement for the supply of three million tonnes per annum (mtpa) of LNG from Vitol to Tellurian.
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Moreover, under the sales and purchase agreement (SPA), the commodity trader will receive three MTPA of LNG on a free on board (FOB) basis from Tellurian’s Driftwood LNG project.
About the Driftwood LNG Project and Reception
Worth noting, the Driftwood LNG project is currently under construction on the west bank of Calcasieu River, Louisiana. Besides, it involves the construction of a 27.6mtpa LNG terminal and 154.5km of feed gas pipeline.
Accordingly, Tellurian estimates the value of SPA, at today’s prices, at approximately $12bn in revenue over the agreed deal period.
In this regard, Tellurian President and CEO Octávio Simões said; “As the world electrifies and our population grows, the demand for reliable, low-cost energy will continue to increase. Therefore, LNG provides a stable source of fuel at an attractive price. So, Tellurian’s integrated model is positioned perfectly to offer volumes on JKM, TTF or blended price basis.”
Similarly, Vitol CEO Ben Marshall said that the agreement would make the company one of the largest natural gas exporters in North America. Besides, it will provide customers with more cost-effective and cleaner fuel solutions.
Other agreements by Tellurian and final thoughts
In fact, Tellurian recently signed a ten-year sales and purchase agreement (SPA) with Gunvor Singapore for 3mtpa of LNG; also from Driftwood LNG.
In this sense, Pablo Galante Escobar, Global Head of LNG and European Gas & Power at Vitol, said: “Vitol is excited to conclude this agreement with Tellurian. Indeed, our long-term commitment and investment-grade rating will help them as they continue their path to financial close.”
On Tellurian’s LNG side, Tarek Souki, Marketing & Trading executive vice-president, commented: “We’ve made exceptional progress on our intended first phase capacity sales by securing this second SPA with another respected global energy trading business.”
Moreover, “the two recent agreements represent an aggregate of $24bn in estimated revenue. Thus, we will continue to be deliberate and selective in choosing our additional customers.”
Lastly, the Driftwood LNG project will process the gas feed from the existing interstate pipeline system. In brief, it is planned to be commissioned in 2023.