lunes, junio 27, 2022

Tellurian CEO: «Our goal is to develop an energy project that is clean, reliable, and safe»

In an exclusive interview with GNL, Octávio Simões President & Chief Executive Officer of Tellurian talks about the current situation of LNG supply, investments, and prices, he also discusses about the Latin American market and the progress of Tellurian’s LNG export project, Driftwood LNG, currently under development in Lake Charles, Louisiana.

Market and current prices of natural gas

Speaking about the current situation of the energy markets and natural gas prices, Simões commented:

«The current high prices that we are experiencing have been the result of a series of events that date back to lower investment in the oil and gas sector. To a large extent, the observed reduction in investments in the sector has been responsible for the current shortage of LNG supply, which has also led to an imbalance between supply and demand».

An imbalance between supply and demand

«Since the middle of last year, we began to experience the result of lower investments in the oil and gas sector, prices started to surge, as economies came out of the pandemic and the supply was not there. A very basic supply and demand rule, the prices of oil and gas started to go up. 

Likewise, the increase in energy prices has also driven an increase in food prices, so we start to seen beginning of inflation. In addition to this, this year, the tragic events between Russia and Ukraine have not only exacerbated the price situation but have also highlighted the supply problems in Europe.

But the problem was already there. The ended result of the lower than required investment in the oil and gas ended up with LNG being in short supply. So we don’t have enough supply right now to meet demand and as a result, prices have increased.»

LNG in short supply

Simões highlighted that between 2012 – 2017, the industry witnessed an increase in global liquefaction capacity of about 150 million tons per year of LNG. However, between 2017 – 2022, that figure has reduced to only about 50 million tons.

In the meantime, markets and energy demand have continued to grow everywhere. The decrease in investments in new LNG projects has notably had an impact on the market.

«It will be five to six years before we see LNG from new projects come to market, so unfortunately, we aim for period of significant shortages of supply, that’s ashamed because we could actually have had a lot natural gas to meet demand worldwide.»

Latin America

Regarding Latin America, Simões highlighted that to achieve its goals of lower emission in the energy sector Latin America will need natural gas.

The Tellurian’s CEO highlighted that for some countries having the flexibility of a fuel that allows covering periods of drought is very important, particularly when hydropower is reduced, as we saw in Brazil last year.

«Countries like Brazil, Argentina, and Chile that have the infrastructure to import LNG, will use the flexibility of LNG to cover energy demand during seasonal periods.»

On Mexico, another major importer of natural gas in Latin America, he said that Mexico relies a lot on natural gas exports from the US but mainly through pipelines in  the northern borders.

He spoke about countries in Central America and the Caribbean, such as Panama, for example, which have developed an LNG import terminal, and currently produce electricity with imported gas, substituting other more expensive liquid fuels.

«Latin America also need to start looking at its energy security, it needs to start looking about the developments of its natural resources, is it fracking possible? Can they drill offshore to produce more oil and gas? as they will need it. 

Countries in Latin America need to get together and say what can we do that is realistic in the energy sector, it is solar, oil or gas. How we are going to need to meet our future energy demand.

For the region, it is important to think of an energy resource that allows it to cover the growing energy demand, avoiding not only the use of more expensive fuels, but also more polluting ones, such as diesel, fuel oil, or wood, which have a very negative impact on health and the environment, and that is where natural gas fits in perfectly.

It is important to meet the energy needs, but when talking about energy needs, other important needs should be covered as well, such as the needs of food, water, health,  housing, care, quality of life, educationdemographics, among others.”

Driftwood LNG Project

Tellurian is currently developing the Driftwood LNG Project, a designed LNG export facility with a nominal capacity of 27.6 million tons of LNG per year, located on the US Gulf Coast, near Lake Charles, Louisiana

In April of this year, as part of its signed Engineering, Procurement, and Construction (EPC) contract, the company issued a limited notice to Bechtel Energy Inc. to begin construction of the first phase of the Driftwood LNG project.

Driftwood LNG. Imagen Tellurian 

Simões highlighted  that Tellurian’s goal is to develop an energy project that is clean, reliable, and safe. Headded that the project had already started the first construction phase in April.

«We are now in the initial Engineering, Procurement and Construction (EPC) phase, we are excited about our project and we will continue to do our best to meet the market by that date.

earthwork. Image courtesy Tellurian

«We expect to make the first LNG delivery in 2026.

The company has highlighted that its strategy is based on four fundamental pillars: ensuring safe low-cost natural gas, designing and building low-cost liquefaction, offering reliable and flexible LNG to a portfolio of global customers and operating our business safely , efficient and reliable.

GNL GLOBAL

KB./

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