Tellurian delays expected completion of Petronet LNG deal by 2 months

Houston — Tellurian has delayed by two months its expected completion of a partnership deal with India's Petronet tied to its proposed Driftwood LNG project in Louisiana, the company said Thursday.

The move, as part of a mutual agreement with Petronet to extend their preliminary deal announced in September 2019, gives it some breathing room, amid weakness in the global LNG market. It is unlikely, however, to dampen the uncertainty surrounding the US developer's commercial efforts. The company's shares have plunged in recent days as speculation about those efforts increased. The shares fell further after Thursday's statement and were down 13% in morning trading in New York.

A memorandum of understanding reached between Tellurian and Petronet calls for the Indian company to negotiate taking an up to $2.5-billion stake in the holding company that includes Driftwood and four pipelines that Tellurian has proposed to build. If finalized at the top end, Petronet would get the rights to 5 million mt a year of supply from Driftwood. Based on 5 million mt/year, Petronet would be responsible for underwriting $5 billion of Driftwood's total project debt.

The deal was previously expected to be completed by the end of March, and Tellurian executives flew to India last weekend to help make that happen. On Thursday, the company said it has agreed with Petronet to extend expected completion of the deal to May 31.

A successful tie-up with Petronet would be a boost for Tellurian, as it is looking to make a final investment decision and begin building the first phase of its up to 27.6 million mt/year liquefaction facility in Louisiana later this year. Startup is targeted for 2023.

There was intense speculation in the market that an agreement would be announced when President Donald Trump and a US delegation met with Prime Minister Narendra Modi this week in New Delhi to discuss economic ties between the two countries. That didn't happen.

That speculation only increased after Tellurian CEO Meg Gentle and Chairman Charif Souki traveled to India the day before Trump's visit on Monday to work on the deal with Petronet. A statement issued Tuesday by India's minister of petroleum and natural gas, Dharmendra Pradhan, said the two countries discussed strengthening their energy ties, specifically in the LNG sector, though it did not announce any deals and did not mention Tellurian. The statement said another US-India ministerial meeting was planned for April.