Houston says Tellurian in talks with several LNG buyers

US LNG company Tellurian, the developer of the Driftwood LNG export plant in Louisiana, is in negotiations with several buyers to sell volumes from the facility after signing a deal with Aethon, according to Tellurian’s executive chairman , Martin Houston.

Dallas-based private investment firm Aethon recently agreed to buy Tellurian’s upstream integrated assets for $260 million.

The two companies also signed a memorandum of understanding which sees the parties negotiating a 20-year offtake agreement for 2 mtpa of LNG.

That represents nearly a quarter of the LNG offtakes Tellurian aims to sell, as it works to advance the Driftwood project toward first LNG in 2028.

“Naturally the market wants to see this transformed into a SPA and we will do that with pace. I was reassured by Aethon’s willingness to immediately announce the HOA as part of the upfront sale, and by its commitment to begin SPA negotiations. This is ongoing,” Houston said in a new letter to shareholders on June 5.

It said “negotiations are underway with several Tier 1 buyers for the remaining 7 mtpa of LNG,” but it did not reveal the names of the buyers.

Recent reports claim that Saudi Arabia’s Aramco and Australia’s Woodside are interested in the Driftwood LNG plant.

“We have also collaborated at all levels with U.S. natural gas producers who, as a group, recognize that international gas markets offer real upside potential over current U.S. natural gas prices,” Houston said.

“We are also exploring other business proposals and our finance team and financial advisor are working hard to further strengthen the company’s balance sheet,” he said.

“I am quietly confident that we will soon announce additional levies – or other
agreements – to move Driftwood LNG forward,” Houston added.

Driftwood LNG

Tellurian issued a limited notice to proceed to fellow engineering and construction giant Bechtel in March 2022.

Under the first phase, Tellurian aims to build two LNG plants near Lake Charles, with an export capacity of up to 11 mtpa and a value of approximately $14.5 billion.

The company recently released the latest construction update and also reported a net loss of approximately $44 million for the quarter ended March 31, 2024, compared to a net loss of $27.5 million for the same period of 2023.

Tellurian says it has invested more than $1 billion in the Driftwood project to date.

The complete project would comprise five plants with a total capacity of approximately 27.6 mtpa.

Tellurian also said in its March presentation that it plans to make a final investment decision in 2024 to build the first two plants at its Driftwood LNG export facility.

Additionally, the company said it plans to issue full notice for Bechtel to begin construction of the first phase of the plant in the second half of this year.