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The future of Louisiana’s Driftwood LNG project unsure as MoU with Petronet expires

A memorandum of understanding (MoU) between Tellurian of the United States and Petronet recently expired, causing uncertainty around the future of this project expected to be built near Lake Charles, Louisiana.  The MoU would have given Petronas a $2.5 billion equity stake in the project along with an agreement to purchase up to 5 million tons of LNG annually (MMtpy).

This agreement was made in April 2019 and was considered one of the final pieces required before settling on an FID for the 27.6 MMtpy project, which would have left only 4 MMpty of capacity yet to sell.  It is worth noting that Tellurian does have additional supply deals secured with Total and Vitol.

The deal was considered to be one of the last pieces needed to reach a final investment decision on the export terminal. It would have left Tellurian with only 4 MMtpy of capacity to sell and a path toward moving ahead with the first phase of the project. The company has other supply deals in place, including those with Total SA and Vitol Inc.  It has also been reported that talks between Tellurian and Petronet are continuing to take place.

This MoU expiration further delays this significant project for Tellurian, as the company continues to deal with pandemic-driven LNG demand drops and new challenges in securing long term supply deals to push projects forward. Tellurian has now delayed its Driftwood construction plans into next year, with a potential startup of commercial LNG production in late 2024 with full operations by 2027.

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From the April 2018 issue of Hydrocarbon Processing


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