India's Petronet LNG Ltd. is identifying the volumes that it would take as part of a proposed investment in Tellurian Inc.'s Driftwood LNG export project, which continues to attract commercial support, Tellurian CEO Meg Gentle said in an interview at an industry conference in Houston.
The progress came as Indian Prime Minister Narendra Modi scheduled a visit to Houston for Sept. 22. The visit, billed as a cultural gathering, also presents the opportunity for more business ties between India and the U.S.
Petronet is among the companies said to be exploring an equity investment in Driftwood. Tellurian has been talking to other potential partners as well in an effort to add to the $500 million investment agreed to earlier this year by France's Total SA. Tellurian expected to have sufficient commercial agreements in place by the end of this year to advance the up to 27.6 million-tonne-per-annum facility.
"Petronet was not ready to talk about volume size in February," Gentle said, referring to the time when the companies signed a memorandum of understanding on potential investment. "For two reasons: They were deciding what their own needs were and also how much demand they could generate amongst their kind of owner companies. Both [GAIL (India) Ltd.] and [Indian Oil Corp. Ltd.] chairmen sit on the board of Petronet. So, they coordinate and work together."
"We've been continuing with them on that question, how much volume are they going to need," Gentle said. "We have some answers on that."
Gentle spoke with S&P Global Market Intelligence and S&P Global Platts at the Gastech conference Sept. 18. While declining to offer details, Gentle indicated that discussions were at an advanced stage.
"You are probably aware of the prime minister coming to Houston this weekend. We are very much looking forward to his trip," Gentle said.
In July, Tellurian finalized an agreement with Total that calls for the French company to make a $500 million equity investment in the holding company that includes Driftwood and four pipelines that Tellurian has proposed to build, in exchange for the right to lift 1 mtpa from the export terminal for the life of the Louisiana facility. At full development, about half of Driftwood's capacity is expected to be used by equity investment partners. The remaining capacity is to be retained by Tellurian to market on its own.
Besides the equity commitment, Total also has agreed to buy 1.5 mtpa of off-take from Tellurian's marketing volumes, indexed to Platts Japan Korea Marker, the benchmark price for spot-traded LNG in Northeast Asia. Commodity trader Vitol Inc. has a preliminary 15-year deal, also to be linked to Platts Japan Korea Marker, to off-take 1.5 mtpa of marketing volumes.
Tellurian has said it expects to make a final investment decision, or FID, by the end of this year. During the interview, co-founder Charif Souki dismissed the importance of a formal FID declaration, saying the developer is already ordering some equipment for the terminal and wants the market to know it expects to build.
"We don't have FID. What we have is IID," Souki said, referring to incremental investment decision. "When we actually decide to start construction, it's automatic."
The project already has its Natural Gas Act certificate from the Federal Energy Regulatory Commission. Asked what milestones Tellurian was focused on, Souki said, "Commercial agreements. We will be finished by the end of the year. And then we will start soon after."
Harry Weber is a reporter with S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.
