Tellurian's Götterdämmerung

In the best market in history for US LNG, Charif Souki could not close the deal of a lifetime

Selling US LNG to Europe became a license to print money after the Russian invasion of Ukraine this year. Unfortunately for Tellurian, Inc., its printing plant has been closed. When I last wrote about the Houston-based natural gas developer back in July, my headline was “Is Tellurian Over?”

This should have been the best of all possible times for Tellurian, which for years has been trying to develop the$12-billion-plus Driftwood LNG terminal in Louisiana. Management, which means Chairman Charif Souki, had a desperate set of buyers in the form of European natural gas utilities. Spreads between the European and US natural gas price have become wide enough to pay not only for a just slightly out of date set of LNG plants, but also for the Souki family lifestyle, which is more billionaire-ish than that of most real billionaires.

And if you read Tellurian press releases, which seem to be written in a sort of selectively disappearing electronic ink, sale and purchase agreements were signed with two major international LNG trading companies, Shell and Vitol. On the face of it, and if you looked at just the right angle, Tellurian seemed to have contracted for all the gas sales it needed to justify the critical “Final Investment Decision”, which is commonly considered the moment when a major project gets the go-ahead.

For real project developers the FID is less momentous than the “NTP” or Notice to Proceed, which tells the lead contractor to start construction. But somehow it doesn’t sound quite as theatrical as “FID”. Souki picked up on this element of financial show business, and had issued a “limited NTP” to Bechtel, his lead contractor, before he had secured the funds for a really Final Investment Decision.