GASTECH -Tellurian in Talks with Potential Partners for Driftwood LNG project

Tellurian has been struggling to recruit customers and investors for the first phase of the Louisiana plant, worth up to $14.5 billion, after suffering some setbacks.

“The risk of execution was not high on the list,” Chief Executive Octavio Simoes said in an interview on the sidelines of the Gastech industry conference.

“But the risk of cost, yes, they have to get comfortable with.”

The project was hit by cancellation of some supply deals last year after two likely customers raised concerns about Tellurian’s ability to finish it.

Potential equity partners were also evaluating image risks in choosing to deal with a fossil fuel project, as well as political risks if the partner was not a U.S. firm, Simoes said.

Such partners could be oil majors, LNG buyers or end users or trading houses, he added.

“The other type that is coming to play recently, which we’re seriously considering, are people that essentially raise funds and then invest for an equity return for their fund holders.”

In August, Tellurian told potential investors it might sell the first six months of its LNG output to help finance the project.

Simoes said Tellurian still aimed to announce equity partners for the project by year-end, and start commercial deliveries by 2028.

On Wednesday, Tellurian unveiled an agreement with energy services firm Baker Hughes (BKR.O) to supply eight main refrigerant compression packages for the first phase of the project.

The pact sets a delivery schedule for eight gas turbines, main refrigerant compressors, and control units so as to reach initial LNG production in 2027, the company said in a statement.

“It’s about watching market conditions,” said Simoes.

“We saw tremendous orders placed by the aviation industry for the turbines that we need. We wanted to secure the schedule, cost and slots for those turbines that we need for Plant 1, so we entered into this agreement with Baker Hughes.”