Petronet LNG is believed to be re-evaluating its plans to invest in Tellurian’s Driftwood LNG terminal and is expected to come up with a decision soon
Speaking to the media, Singh said that LNG prices in the spot market are close to $3 per million British thermal units (mBtu) currently and may rise by 70 cents
New Delhi: Commenting on Petronet LNG Limited’s $2.5 investment plan in US LNG developer Tellurian’s upcoming Driftwood LNG terminal in Louisiana, Managing Director and CEO Prabhat Singh said that investments in the LNG market do not look very lucrative at this time. “We are exploring the market. But one thing is sure that investments as such are not looking lucrative at this point of time. To that extent, if you are getting a molecule floating on the water which is very cheap, which we are getting at this point of time, so those are the options which are on top priority today and we are working around that,” Singh told the media on Tuesday.
The deal between Petronet LNG and Tellurian was renewed earlier this year. However, in the backdrop of the COVID-19 pandemic and the decline in global crude oil prices and natural gas, Petronet LNG is believed to be re-evaluating its plans and is expected to come up with a decision soon, media reports have claimed. Petronet has until December to reach a final agreement with Tellurian on the matter.
Petronet LNG’s Tellurian investment plan
In September 2019, Petronet LNG signed a non-binding memorandum of understanding with Tellurian which gave PLL the option to buy 5 million tonne per annum (mtpa) of LNG from Tellurian’s Driftwood project in Louisiana. In return, Petronet was to spend $2.5 billion for an 18 percent equity stake in the $28 billion Driftwood LNG terminal.
Speaking to the media, Singh said that LNG prices in the spot market are close to $3 per million British thermal units (mBtu) currently and may rise by 70 cents. And under long-term contracts, prices are expected to be around $4.5-5.5 per mBtu. “In my opinion, the prices are expected to remain in this range...The days of $10 per mBtu gas price are over now,” said the PLL MD.
He also added that spot LNG price would remain below $6 per mBtu for the rest of the financial year.
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