Deal with Tellurian for 40-year gas supply no longer exists: Petronet LNG

Under the terms of the old agreement, the two were to finalise an investment deal by December 2020. This was after an earlier extension of the agreement which had lapsed in March 2020

Petronet LNG and US-based Tellurian Inc. do not have an agreement any more, revealed Petronet’s Managing Director and Chief Executive Officer A K Singh on Wednesday.
 
This means that the proposed $2.5-billion investment in Tellurian's Driftwood LNG project will not fructify.
 
Responding to queries from Business Standard, Singh said, “I think the memorandum of understanding (MoU) is not extended. As of today, there is no MoU with us.”
 
Under the terms of agreement, the two were to finalise an investment deal by December 2020. This was after an earlier extension to the agreement had lapsed in March 2020. When asked about the reason for another extension not being sought, Singh said, “It is not from Petronet LNG, it is from Tellurian. We did not get any request for an extension,” indicating the deal agreement stands annulled.
 
Speaking at an analyst call later, Petronet LNG's Director (Finance) Vinod Kumar Mishra said the company could consider an investment of around Rs 12,000-15,000 crore. Of this, Rs 8,000 crore may be for developing the domestic liquefied natural gas (LNG) infrastructure.
 
"This is at a proposal stage. We have a plan for investment in a phased manner, largely for LNG dispensation units in the first phase. Five dispensation stations are being set up in the initial phase. Depending on their success, further investment plans may be considered," he told Business Standard.
 
In November 2020, executives from Petronet LNG had started distancing themselves from the Tellurian deal agreement. They said the agreement was non-binding and it was to only explore the possibilities of a deal that had not emerged till then. This MoU was signed between Petronet LNG and Tellurian during Prime Minister Narendra Modi’s visit to Houston in September 2019. It was projected as one of the largest foreign investments in the US to ship shale gas abroad.

 
The agreement was for buying 5 million tonnes per annum (mtpa) of LNG from Tellurian’s proposed Driftwood LNG terminal for 40 years.
 
Petronet was also supposed to make an equity investment of $2.5 billion for 18 per cent stake in Driftwood. Singh said Petronet LNG is still on the look-out for more gas suppliers. He said, “We are expanding our terminals. India is not specific to any company, country or party. Wherever we get the best deal, we will proceed on that. There are no particular terms under which we are proposing to proceed.” Commenting on the existing long-term deal with Qatar for importing 7.5 mtpa of LNG, Singh said the deal ends in March 2028.
 
Petronet LNG has time till December 2023 to decide if it wants to extend this deal with Qatar’s RasGas Company.
 
Singh said domestically, natural gas consumption was hit in the second wave of the Covid-19 pandemic as lockdowns extended in many parts of the country.
 
“Spot gas price in the international market has also risen and is now $10-plus per million British thermal units (mBtu). That is also impacting the use of gas in India, which is predominantly dependent on the spot price,” he added.