Tellurian inks 10-yr LNG contract with Gunvor tied to TTF, JKM indices

London, (Quantum Commodity Intelligence) – Houston-based LNG producer Tellurian has signed a 10-year agreement to supply trading house Gunvor with 30 million mt of super-cooled liquefied natural gas, the companies said in a statement Thursday.

The deal will involve Tellurian supplying Gunvor’s Singapore trading entity with 3 milllion mt a year of the methane with the price tied to the price of European gas via the TTF price index as well as the Asian price via Platts’ JKM marker and adjusted for freight costs.

Gunvor will take ownership of the gas on a FOB basis at Tellurian’s Driftwood LNG terminal in Louisiana in the US Gulf.

President and CEO Octavio Simoes said: “Tellurian intends to market up to 10 mtpa (million metric tons per annum) of LNG in our first phase on a JKM, TTF or blended price basis, as our integrated model provides the flexibility to offer this valuable product.”

The deal comes as prices for LNG and European gas are spiking, while US gas prices remain at relatively low levels.

A stock build in Asia after an unusually cold winter has dovetailed with higher demand from Europe as record carbon prices hits demand for coal there.

Demand for the gas – a so-called bridging fuel to help the world wean itself off coal – is set to remain high for the next four years.

Robert Sims, head of LNG short term, gas and LNG research, said: “Lower winter starting inventory in Europe, combined with high seasonal Asian demand, will result in increased competition for Atlantic LNG, including from the US, putting pressure on LNG prices.”

However, he added that prices would soften next year due to slower demand growth in Asia, coal and nuclear supply outmuscles gas in Japan’s energy mix and fresh supply from India will come online.