Petronet, Tellurian Talks Drag On

The talks between Indian Petronet LNG and US developer Tellurian regarding the finalisation of the deal in which the former will pick up an equity stake in the Driftwood LNG export project are continuing with no result so far. Earlier this month various media outlets had reported that a final deal would be clinched during US president Donald Trump’s visit to India earlier this week. However, no announcement has been made.

In September last year, Tellurian signed a memorandum of understanding (MoU) with Petronet LNG to negotiate the supply of up to 5mn metric tons/year of LNG from Driftwood project. As per the MoU, Petronet LNG, India's biggest LNG importer, was also to pick up an equity stake in the project.

Bloomberg has now reported that Petronet LNG has started soliciting offers for supply under terms similar to a tentative agreement it signed with Tellurian. With the global LNG market oversupplied and prices at multi year lows, India is seeking the best price possible. It is benefiting from the distressed prices on offer following the Covid-19 virus outbreak in China, with January imports up 25% year on year.

Petronet issued the tender to glean price and market information that it will use to back its position during talks with Tellurian, which are expected next month, as well as to justify to shareholders its final decision, a source told Bloomberg. Petronet LNG and Tellurian have set March 31 as deadline to finalise the deal.

Tellurian expects to take a final investment decision (FID) on the Driftwood LNG export plant in early 2020, chairman Charif Souki told NGW at the Oil & Money conference in London in October.

Petronet LNG is also looking to renegotiate the pricing of its long-term LNG import contract with Qatar amid falling spot rates. India imports 8.5mn mt/year of LNG from Qatar under a long-term contract.