Vitol snaps up Driftwood LNG offtake deal

US liquefied natural gas project developer Tellurian has finalized an LNG sales and purchase agreement (SPA) with Vitol.

The SPA is for three million tonnes per annum (mtpa) on a free on board (FOB) basis at Driftwood LNG for a ten-year period, 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.

At today’s prices, the agreement is valued at approximately $12 billion in revenue over ten years, Tellurian informed in its statement on Thursday.

President and CEO Octávio Simões said, “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 finalize 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.”

Executive Vice President LNG Marketing & Trading Tarek Souki added, “Tellurian has made exceptional progress on our intended first phase capacity sales by securing this second SPA with another respected global energy trading business. The two recent agreements represent an aggregate of $24 billion in estimated revenue; we will continue to be deliberate and selective in choosing our additional customers.”

With the agreement, Vitol becomes North America’s largest exporter of natural gas, according to the company’s CEO Ben Marshall.

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The deal with Vitol adds to the agreement finalized at the end of May with the commodity trader Gunvor.

To remind, under that agreement with Gunvor Singapore, Tellurian will supply three million tonnes per annum (mtpa) for a ten-year period, indexed to a combination of two indices; the Japan Korea Marker (JKM) and the Dutch Title Transfer Facility (TTF), netted back for transportation charges.

The first phase of Driftwood is expected for operation in 2025 and will produce about 16.5 million tonnes per annum of LNG, equivalent to about 2.2 billion cubic feet per day of natural gas.

At full buildout the $16.8 billion project will be capable of producing 27.6 million of LNG per year.