Tellurian has finalized 10-year liquefied natural gas (LNG) sale and purchase agreements (SPAs) with Shell for 3 mtpa from the Driftwood LNG project in Louisiana. The SPAs are on a free on board (FOB) basis and indexed to a combination of two indices: the Japan Korea Marker and the Dutch Title Transfer Facility, each netted back for transportation charges.
The agreements mark the third deal that Tellurian has finalized in 10 weeks, totaling 9 mtpa and nearly all the capacity of Driftwood LNG’s first two plants. In June, Tellurian signed a similar deal with energy trader Vitol. A month prior, another 10-year, 3-mtpa deal was struck with Guvnor Singapore.
“Shell manages one of the largest and most diverse portfolios of LNG in the world and is leading the industry in delivering CO2e-neutral LNG cargoes,” said Octávio Simões, president and chief executive at Tellurian. “Owing to Driftwood’s integrated project, our ability to accurately measure well-to-loading-arm emissions and reduce emissions where operationally possible, further enables Shell’s CO2e-neutral LNG offering.”
Shell expects LNG demand to nearly double by 2040. The deal secures additional competitive volumes for the operator’s portfolio by the mid-2020s, enabling it to continue providing diverse and flexible LNG supply to its customers.
“With these SPAs, we have now completed the sales to support the launching of the first two plants,” added Simões. “Tellurian will now focus on financing Driftwood, in order to give Bechtel notice to proceed with construction in early 2022.”
Tellurian and US-based Bechtel signed four fixed-price, lump-sum, turnkey agreements totaling $15.2 billion for engineering, procurement, and construction (EPC) services, related to Driftwood back in November 2017. After economic and COVID-19 related delays, the project is now due to break ground in 2022.
