US LNG export project developer Tellurian has signed a 10-year deal with trader Vitol to supply liquefied natural gas from its Driftwood project in Louisiana.
Under the sales and purchase agreement, Tellurian would supply three million tonnes per annum on a free on board (FOB) basis to Vitol, it said in a statement on Thursday.
Moreover, the price will be indexed to a combination of two indices, the Japan Korea Marker (JKM) and the Dutch Title Transfer Facility (TTF), netted back for transportation charges.
At today’s prices, the agreement has a price tag of about $12 billion, Tellurian said.
This marks the second deal Tellurian announced in the last two weeks following a similar contract with Gunvor.
Combined the two deals represent an aggregate of $24 billion in revenue and six mtpa of contracted volumes over the ten-year period.
“Tellurian continues to execute on our plan to market Driftwood LNG volumes on indices that our customers want,” chief executive Octavio Simoes said in the statement.
“Vitol expressed interest in the development of Driftwood early on, and it is fulfilling to finalize this agreement with the world’s largest independent trader of energy,” he said.
Vitol’s chief executive Ben Marshall added that this deal would make the trader one of North America’s largest exporters of natural gas.
First Driftwood LNG phase
The two deals come just weeks after co-founder and executive chairman Charif Souki said Tellurian would finalize several commercial agreements for its planned 27.6 mtpa Driftwood project.
He said then the firm would probably sell 12-15 million tonnes of capacity over the next few weeks via Zoom.
If finalized, the capacity would be sufficient for the project’s first phase with a capacity of 16.6 mtpa. This phase could go online in 2025.
The Driftwood project has a preliminary $15.5 billion lump-sum turn key engineering, procurement and construction contract with Bechtel.
Charif Souki previously said Tellurian expected to give notice to proceed to Bechtel in the first quarter of next year but some construction work would start this summer.
This includes preparational work prior to the start of full construction activities.
Prior to these two deals, France’s Total was the only company that made a firm commitment to support the project with a $500 million investment.
