Page 7 - GLNG Week 40 2022
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GLNG COMMENTARY GLNG
signed last year, with commodity trader Gun- also proved ill-fated, with France’s TotalEnergies
vor, is unclear but there has been no mention of initially agreeing to invest $700mn in Driftwood
a cancellation, so it is thought to still be in place. before terminating its agreement owing to a
missed deadline for sanctioning the project.
What next? Tellurian’s executive chairman, Charif Souki,
The latest setbacks leave Tellurian still trying to did concede prior to the news that two SPAs had
figure out how to proceed with Driftwood’s con- been terminated that the scrapped bond offer-
struction after it looked like significant progress ing would affect the company’s financial ability
was being made over the past year. to begin delivering LNG on its previous sched-
Indeed, the company had begun some initial ule. In the statement on the company’s updated
construction at the Driftwood side despite not strategy, Tellurian’s president and CEO, Octávio
having yet reached a final investment decision Simões, talked up its status as an existing gas
(FID). It is difficult to see, however, how the pro- producer whose output is anticipated to expand.
ject can advance further in the near term without The eventual completion of Driftwood now
new investment. appears to be being portrayed as a development
Tellurian has sought to emphasise the pos- that will eventually provide additional value
itives in the recent developments, for example and unlock expanded access to global mar-
by saying that the termination of the two SPAs kets. Simões said the company would continue
would give its gas portfolio additional flexibility. funding its construction plans with cash and
In a September 27 statement, the company said it operating cash flow. It appears, however, that
had updated its financing strategy for Driftwood the company’s fortunes would need to change
to prioritise lining up equity partners. significantly in order to help further advance the
This is reminiscent of the company’s initial project. And currently, it may not look like an
strategy for the terminal, which also involved attractive bet to investors.
equity partners. However, that initial effort had
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