Tellurian In LNG Supply Deal With Vitol
US LNG developer Tellurian said December 6 it has entered into a memorandum of understanding (MOU) with Vitol to supply the Swiss trading house with 1.5mn metric tons/year (mt/yr) of LNG from its proposed Driftwood LNG export terminal in Louisiana.
The transaction price is based on Platt’s Japan Korea Marker (JKM) and is for a minimum term of 15 years. The two parties expect to negotiate a sales and purchase agreement under which Vitol will purchase LNG on a free-on-board basis, subject to Tellurian receiving regulatory approval for and taking a positive final investment decision on the 27mn mt/yr Driftwood project.
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Vitol – which last month agreed to take LNG from Malaysian state producer Petronas and its 25% share in the Shell-led LNG Canada terminal – is also evaluating a potential equity investment in Driftwood Holdings Partnership.
“The LNG business is evolving into a true commodity market, which includes LNG purchases and sales based on actual LNG prices rather than indexing to other energy products,” Tellurian CEO Meg Gentle said. “JKM has emerged as the most liquid and transparent pricing mechanism for LNG.”
Tellurian expects to receive a final environmental impact statement from the US Federal Energy Regulatory Commission in January 2019 and to make a final investment decision in 1H 2019. Operations could begin in 2023.