Midstream

Tellurian will sell LNG to Shell from proposed Driftwood plant in Louisiana

Tellurian

Tellurian Inc. the Houston-based natural gas company, announced this Thursday it has finalized agreements to sell liquified natural gas (LNG) to Shell; sales will come from Tellurian’s proposed Driftwood export plant in Louisiana.

Firstly, the sale agreement involves 3 million tons of LNG annually, for a 10-year period. The price at what the LNG will be sold will be the Japan Korea Marker; and the Dutch Title Transfer Facility.

Secondly, after the news, shares from Tellurian jumped 12,8%, to $4,13 per share, according to the statement.

Thirdly, this sale agreement with Shell, is not the first one for Tellurian in regards to its LNG production; in fact, it is the third one that the company has finalized in 10 days. Overall, it has secured sales for 9 MTPA; which according to the company, is nearly the capacity of the proposed 27.5-MTPA Driftwood’s first two plants.

Moreover, the first two deals out of the three, where with commodity traders Vitol and Gunvor. Deals secured for Tellurian a $12 billion revenue for over 10 years.

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Tellurian will now proceed to construct the plant

In addition, in regards to the relevance of the agreements, Tellurian Chief Executive Officer Octavio Simoes said in a statement. “With these agreements, we have now completed the sales to support the launching of the first two plants. Tellurian will now focus on financing Driftwood, in order to give Bechtel notice to proceed with construction in early 2022.”

On the other hand, Shell Energy Executive Vice President Steve Hill said. “LNG demand is expected to nearly double by 2040. This deal secures additional competitive volumes for our portfolio by the mid-2020s.”

Furthermore, the Driftwood project has faced back decision to start construction, as many of LNG projects across the United States. According to the statement, mainly due to an insufficient number of customers signing the long-term deals needed to finance the multibillion-dollar facilities.

However, with the deals secured with Shell and the other partners, Tellurian will now start preparing the Driftwood site for construction later this summer.

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