A 2019 memorandum of understanding between Tellurian Inc. and India’s Petronet LNG has expired, leaving questions about the status of the Driftwood LNG planned for Lake Charles.
The deal called for a $2.5 billion equity stake from Petronet and an agreement to purchase up to 5 million tons of LNG per year.
According to multiple media reports, the company continues talks with Petronet and other possible buyers for the planned terminal with a capacity 27.6 million metric tons per year over the life of the project.
The deal—along with others Tellurian has in place with Vitol Inc. and Total SA—was considered critical to reaching a final investment decision, as it left Tellurian with just 4 million metric tons per year of capacity to sell.
Signs of problems with the MOU emerged in February during President Donald Trump’s visit to India. Tellurian, too, had a team on the ground in hopes of finalizing the supply deal by the end of March. Soon after that, Tellurian said it had extended its Memorandum of Understanding with Petronet to May 31 to allow additional time for Petronet’s consultative review process. Media reports indicated Petronet was searching for competing deals.
As is the case with LNG industry in general, times are tough for Tellurian. In March, Tellurian reported that Wilmington Trust and other creditors have given the company an extension on $75 million in loans that were due May 23. The agreement came less than a month after Tellurian laid off more than 40% of its 176 employees, reshuffled executives and cut expenses in a bid to save its Driftwood LNG project in Lake Charles.
In April 2019, the U.S. Federal Energy Regulatory Commission authorized Tellurian Inc.’s Driftwood LNG, a proposed 27.6 million tons per year liquefaction export facility near Lake Charles, as well as the associated Driftwood pipeline, a 96-mile proposed pipeline connecting to the facility.
The company was originally expected to begin construction on the 1,000-acre site and deliver its first LNG in 2023. Plans call for up to 20 trains and three marine berths.