Tellurian Inc. confirmed Friday that a memorandum of understanding (MOU) with India’s Petronet LNG Ltd. has expired in a development that’s likely to delay the sanctioning of its massive natural gas export project on the Gulf Coast.
Spokesperson Joi Lecznar said while the MOU lapsed, discussions are ongoing with Petronet and other possible offtakers for the 27.6 million metric tons/year (mmty) liquefied natural gas (LNG) terminal, which would be south of Lake Charles, LA. Under the MOU that was signed last year, India’s largest LNG importer would have negotiated to purchase up to 5 mmty from Driftwood and take a $2.5 billion equity stake.
The deal was seen as one of the last pieces needed to reach a final investment decision on the export terminal. It would have left Tellurian with only 4 mmty 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.
The agreement was jeopardized after Tellurian management traveled to India in February, a trip that many market observers expected would result in a signed supply deal. It instead led the parties to push back finalizing a transaction until May 31, two months later than the March 31 date set out in the MOU late last year.
The MOU’s expiration is the latest in a series of setbacks for Tellurian as it grapples with a market flooded with LNG that’s pushed prices to historic lows and made it difficult to land long-term supply deals.
Earlier this year, the company cut corporate spending, reshuffled management and reduced its workforce to better navigate the market and economic impacts of the Covid-19 pandemic.
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