A Lowdown on Tellurian, Soon to be India’s Major LNG Supplier

Tellurian nearly doubled its revenues in FY2018 to $10.3 million from $5.4 million in FY2017.

Right at the beginning of Prime Minister Narendra Modi’s recent United States trip, Indian PSU Petronet signed a Memorandum of Understanding (MoU) with American LNG company Tellurian.

Tellurian, incidentally, was also one of the sponsors of the ‘Howdy, Modi!’ event.

Under the $7.5 billion agreement, Petronet, along with its affiliates, will invest $2.5 billion to purchase up to 5 million tonnes per annum (mtpa) of liquefied natural gas (LNG) from Tellurian’s Driftwood project.

While Petronet was formed in 1998, with the aim of importing LNG and setting up LNG terminals in the country, Tellurian is a rather new entrant in the business.

Here is a look at the US-based company:

Origin

Tellurian’s journey began in February 2016, when Charif Souki formed the company, along with Martin Houston, former Chief Operating Officer (COO) of BG Group, another company engaged in the exploration, development and production of natural gas and oil.

In December 2015, Cheniere Energy, yet another player in the oil and gas business, fired Souki, its then Chief Executive Officer (CEO), due to disagreements over his expansion plans, according to news agency Reuters.

Two months down the line, Souki teamed up with Houston to unveil Tellurian Investments. However, there’s a backstory involving Cheniere, Souki and Houston that might well have led to Tellurian’s coming into being.

Cheniere’s Lawsuit Against Souki Ft Houston

In February this year, Cheniere sued Souki, alleging he conspired to help finance a joint venture that led to the formation of LNG rival Tellurian Inc.

Cheniere is seeking a repayment of a loan worth $46 million, plus unspecified damages, that were extended to a company named Parallax Enterprises in 2015.

Incidentally, Parallax was a firm owned by Houston and the loan it received was arranged by Souki, Reuters reported.

The civil lawsuit filed by Cheniere alleges that Souki and Houston put a plan together in December 2015 to close Parallax, without repaying Cheniere, but continue its operations through a new company that became Tellurian.

Driftwood LNG Facility

The Driftwood LNG facility is a vital cog in the Tellurian story as it’s the very liquefaction plant which will be supplying gas to Petronet.

The 650-acre site in Louisiana on the Calcasieu river, owned by Tellurian has a capacity to liquify up to 12 million tons of gas annually.

However, setting up of the entire factory along with gas transportation pipelines and development of upstream reserves will not allow Tellurian to begin commercial production before 2023, a Mint report said.

Financial Situation

After being formed in February 2016, the company got listed on NASDAQ, close on the heels of its merger with Magellan Petroleum in 2017.

Currently, the company has a total market capitalisation of $2 billion.

Tellurian also, nearly doubled its revenues in FY2018 to $10.3 million from $5.4 million in FY2017. However, its net income slipped from 231.5 million in 2017-18 to 125.7 million in 2018-19.