The prospects for Tellurian’s Driftwood LNG project were dealt a blow in September with the termination of long-term supply and purchase deals with Shell and Vitol, and cancellation of a bond offering
Tellurian said the termination of the sales and purchase agreements (SPAs) with Shell and Vitol reflected a change in its financing strategy that would “prioritise securing equity partners” for its 27.6-mta Driftwood LNG project.
The separate SPAs with Shell and Vitol were announced slightly over a year ago under which both agreed to purchase 3.0M tonnes per annum of LNG over a 10-year period on a free on board basis from the proposed Louisiana LNG export terminal. Both were indexed to a combination of two indices: the Japan Korea Marker and the Dutch Title Transfer Facility, each netted back for transport charges.
About a week prior to the announcement of the termination of the SPAs, Tellurian announced that, due to uncertain conditions in the high-yield market, it has withdrawing its proposed public offering of units consisting of 11.25% senior secured notes due 2027 and warrants to purchase shares of Tellurian common stock. The bond offering could have potentially raised US$1Bn for financing the project.
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