Commodities traders Gunvor Singapore and Vitol have signed 10-year LNG sales and purchase agreements (SPAs) with US natural gas company Tellurian.
Under the terms of its SPA, Gunvor will buy 3 million tpa of LNG from Tellurian’s Driftwood LNG project in Louisiana, US, on a free on board (FOB) basis. The price is indexed to a combination of two indices – the Japan Korea Marker (JKM) and the Dutch Title Transfer Facility (TTF), each netted back for transportation charges. Vitol will also buy 3 million tpa of LNG on a free on board (FOB) basis with same indices. Both agreements are currently valued at around US$12 billion (€9.9 billion) in revenue over the 10-year period.
Tellurian president and CEO Octávio Simões says that Tellurian hopes to market up to 10 million tpa of LNG from the first phase of Driftwood LNG, and welcomed Gunvor Singapore to the project.
‘Tellurian continues to execute on our plan to market Driftwood LNG volumes on indices that our customers want. Vitol expressed interest in the development of Driftwood early on, and it is fulfilling to finalise this agreement with the world’s largest independent trader of energy. As the world electrifies and our population grows, the demand for reliable, low-cost energy will continue to increase. LNG provides a stable source of fuel at an attractive price, and Tellurian’s integrated model is positioned perfectly to offer volumes on JKM, TTF or blended price basis,’ Simões says of the Vitol SPA.
Driftwood LNG is currently under development, and when fully complete, will have a capacity of 27.6m t/y with up to 20 trains of 1.38m t/y each. It will have three storage tanks each with a capacity of 235,000 m3, and three marine berths. Construction was delayed in 2020 after the company failed to gain enough interest from potential partners to secure financing for construction. However, the company said it expected to sign sufficient deals to begin construction in 2021.