Tellurian to Sell LNG to Gunvor, Delays Louisiana Project Start
U.S. liquefied natural gas (LNG) developer Tellurian Inc said on Thursday it signed a 10-year agreement with commodity trader Gunvor Group for 3 million tonnes per annum (MTPA) of LNG.
Tellurian shares soared around 24% on the news to their highest since February.
In addition, Tellurian released a presentation that said its proposed Driftwood export plant in Louisiana was positioned for first quarter 2022 commerciality.
Analysts at Cowen & Co said in a note that meant Tellurian pushed back the final investment decision (FID) for Driftwood from 2021 to 2022.
Officials at Tellurian were not immediately available for comment. Earlier this year, the company said it hoped to start construction this summer.
Tellurian said the Gunvor agreement represents the equivalent of about $12 billion in revenue over the 10-year term.
Cowen said Tellurian "appears to have altered its strategy from pursuing a model of customers buying-in to the project in exchange for LNG at cost."
"The change increases the offtake it needs to secure, even in-light of the Gunvor (agreement), making FID more challenging," Cowen said.
Demand for LNG has surged in recent years as nations like China and India buy more of the super-cooled fuel to meet fast-growing energy needs while also weaning consumers off dirtier coal.
Even though global LNG demand is expected to keep hitting fresh highs, three North American projects stopped development in the past few months, as customers remain hesitant to sign long-term purchase agreements needed to finance the multibillion plants.
Unlike other projects that sell LNG, Tellurian wanted investors to buy a stake in Driftwood, which includes the liquefaction plant, pipelines and gas production.
Oil major Total SE agreed to invest in Driftwood.
Tellurian has said the first phase of Driftwood would cost about $16.8 billion and produce about 16.5 MTPA of LNG.
(Reporting by Arunima Kumar and Scott DiSavino; Editing by Krishna Chandra Eluri and Marguerita Choy)