NEW DELHI/NEW YORK (Reuters) - Shares of U.S. liquefied natural gas (LNG) developer Tellurian Inc TELL.O soared after Indian sources familiar with the matter said India's top gas importer, Petronet LNG PLNG.NS, renewed a deal to give the parties more time to finalize an investment in Tellurian's Driftwood export project in Louisiana.
Shares of Tellurian, which did not comment on the Petronet deal, were up as high as 53% in midday trade.
Petronet and Tellurian now have until the end of December to finalize the deal, sources said. Developers have delayed numerous North American LNG projects this year due to a sharp downturn in global gas prices. LNG supply increased by a record amount in 2019, and the coronavirus has sapped overall fuel demand.
The companies signed a non-binding agreement in September 2019, in which Petronet agreed to negotiate the annual purchase of up to 5 million tonnes of LNG, over the lifespan of the project, concurrent with an equity investment in Driftwood.
That deal lapsed on May 31, and was renewed last week ahead of a virtual meeting between Indian oil minister Dharmendra Pradhan and U.S. Energy Secretary Dan Brouillette.
India is expanding its pipeline network and building LNG import terminals to encourage use of cleaner fuel. Prime Minister Narendra Modi has set a target to raise the share of gas in India’s energy mix to 15% by 2030 from 6.2% now.
Petronet was not immediately available for comment.
“The long-term LNG fundamentals have not changed, just slowed by COVID-19. India continues to need a large amount of LNG and the U.S. continues to produce the lowest cost LNG, so it stands to reason Tellurian would continue to work with all LNG buyers in India,” Tellurian said.
Tellurian has said the $27.5 billion Driftwood project, which includes pipelines, is designed to produce 27.6 million tonnes per annum of LNG.
Reporting by Nidhi Verma and Scott DiSavino; Editing by Chizu Nomiyama and Alistair Bell
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