Construction of Tellurian Driftwood LNG in Carlyss continues despite canceled contracts with Shell, Vitol and most recently, Gunvor.

“We’re suffering the consequences of being unique,” said Octovio Simoes, President and CEO, when asked about reports that the canceled contract would mean an end to Driftwood.

He said it’s just another move keeping in line with Tellurian’s updated LNG financing strategy.

“Up until Driftwood, the business model was simple: get people to sign contracts, knowing there was a risk that the fixed fee model would not be enough to pay for operating costs to attract bank financing,” he said.

New partners may want LNG volumes they can sell to global markets at global pricing.

“We don’t need those contracts to fund the projects,” he said.

Last month, Charif Souki, Tellurian executive chairman, told a S&P Global Commodity Insight reporter that he is waiting for deals that offer a handsome return for the shareholders.

Tellurian expects to own 45 percent of the first phase of the project and retain full ownership of the expansion. The counterparties that Tellurian is in talks with fit into two categories, international buyers that want to access American gas at cost or close to cost and American producers that want exposure to global pricing.

10,000 piles have already been driven at the construction site and 10,000 cubic meters of concrete have been poured, but a pace slower than if Tellurian had given Bechtel the full speed ahead signal.

The plan is to secure equity partners and give Bechtel notice to proceed before the end of the year, Simoes said. That would mean the first shipment would sail at the end of 2027.

Shell terminated its contract with Tellurian in September 2022.  Simoes said Tellurian initiated the cancellation of the Vitol project. It needed the volume to make a new finance strategy work.

In May 2021, Tellurian and Gunvor signed a 10-year LNG agreement for three million tonnes per annum (mtpa) for ten years from Tellurian’s Driftwood LNG, a 37.6 mtpa liquefaction facility in Sulphur. The original deal was amended in December, 2022 then January 31, 2023.

The agreement was terminated after the company said it couldn’t agree with Tellurian “on the commercial terms,” according to a Monday filing with the Securities and Exchange Commission. Information was disclosed by Tellurian on Tuesday.

Gunvor Group had the option to terminate its deal after a deadline passed wherein Tellurian did not meet certain conditions, according to an online report from National Gas Intelligence. Reuters reported that the conditions had to do with financial go-ahead, project financing and full construction authorization February 28, 2023.