Page 15 - NorthAmOil Week 25

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Tellurian tries to push Driftwood

LNG forward after delay

LOUISIANA HOUSTON-BASED Tellurian announced this
week that Charif Souki had been appointed
executive chairman, having been its non-execu-
tive chairman since he co-founded the company
in 2016. The move, which is typically associated
with more responsibility and involvement, has
been made in a bid to push forward the proposed
Driftwood LNG export project. The project suf-
fered a setback recently when its construction
was pushed back until 2021 after a preliminary
supply deal with India’s Petronet expired in May.
Expiry of the memorandum of understand-
ing (MoU) with Petronet came as the LNG
market has become increasingly oversupplied,
making it more difficult for new entrants to
finalise offtake agreements. Market conditions
have been exacerbated by the coronavirus
(COVID-19) pandemic, but Tellurian appears to
remain hopeful that a future uptick in demand
is coming.
“Demand for liquefied natural gas grew 13%
last year and continues to grow at a pace that
will outstrip capacity growth unless we act now
and get facilities built,” Tellurian’s president and
CEO, Meg Gentle, said in a June 22 statement.
“While COVID-19 has slowed the market this
year, the market is rebalancing quickly and the
underlying fundamentals that support long-
term investment in LNG are strengthening. We
are fortunate to have the benefit of our found-
ers’ marketing expertise and relationships as we
commercialise and finance Driftwood LNG.”
Souki made a name for himself through
Cheniere Energy, which he founded in 1996 and Sabine Pass to 30mn tpy. The project is ready for Souki made a name
which is now the US’ leading LNG exporter. The construction, having received all necessary per- for himself through
Tellurian will company initially built an import terminal at mits and with 30% of engineering completed Cheniere Energy before
with contractor Bechtel.
Sabine Pass, Louisiana, but the facility was repur-
going on to co-found
be hoping that posed for liquefaction and export after the shale However, the facility is still estimated to cost Tellurian.
Souki taking a boom transformed the US’ domestic gas supply around $30bn to build, and Tellurian has strug-
picture. However, Souki was ousted from the gled to bring in buyers – to whom it is offering
more hands- company in late 2015, just weeks before Sabine equity stakes in the project in order to encour-
Pass exported its first cargo, after a unanimous age participation. France’s Total is a participant
on approach vote by Cheniere’s board to remove him as chair- in the project but has recently voiced doubts over
the need for developing new liquefaction capac-
man and CEO.
can help revive The catalyst for Souki’s removal was reported ity, and specifically Driftwood.
Driftwood’s to be a disagreement with the board over his “The priority is not to invest more in mer-
2016 budget request and how it would affect the chant projects in the US,” Total’s CEO, Pat-
flagging strategic direction of Cheniere. However, the rick Pouyanné, told analysts on his company’s
Financial Times cited a source familiar with the first-quarter earnings call in May.
momentum. matter as saying at the time that Souki had pre- Total has the right to back out of its new cap-
viously threatened to resign on several occasions ital contribution agreement if Tellurian fails
during the course of 2015. to make a final investment decision (FID) on
Souki went on to co-found Tellurian, claim- Driftwood by July 2021, according to a securi-
ing he would be able to undercut Cheniere on ties filing.
costs by 15-20%. Driftwood LNG would have a But despite these setbacks, Tellurian will
capacity of 27.6mn tonnes per year, which would be hoping that Souki taking a more hands-on
make it larger than any US LNG facility currently approach can help revive Driftwood’s flagging
– though Cheniere is in the process of expanding momentum.™

Week 25 25•June•2020 www. NEWSBASE .com P15