If you build it, they will come - Tellurian launches construction of Driftwood LNG
Natalia Lagutkina/iStock via Getty Images

Tellurian (TELL) announced Monday that it has issued a notice to proceed to Bechtel, under its contract to begin construction of Driftwood LNG. Baker Hughes (BKR) will proceed with manufacturing two of the natural gas turbines for the first phase. "Beginning construction now allows Tellurian (TELL) to deliver upon our robust schedule for first LNG in 2026," said CEO Octavio Simoes.
Tellurian (TELL) has been in pole position for final investment decision on Driftwood since the war in Ukraine began, but announcing construction before financing and offtake is agreed upon could come as a surprise to industry. Liquified natural gas plants are expensive and largely financed by banks. Banks that prefer to lend against the security of long-term offtake agreements. Construction of Driftwood phase 1 is estimated to cost $12b, with a $30b price tag for the full project.
In mid-March, Tellurian (TELL) Chairman Charif Souki said the company was "on the verge" of sanctioning Driftwood LNG, and that the project was "sold out." Souki is in Berlin this week meeting with potential customers, and the decision to begin construction points to strong demand for offtake agreements. Assuming the company announces finalized offtake agreements and financing in coming weeks, multi-year highs could be within reach.