Tellurian talks vessels as it charters first LNG unit

Emerging gas development company's marketing and trading chief Tarek Souki says Tellurian is taking a 'measured approach'

Liquefaction developer Tellurian is honing its shipping skills for its US-based Driftwood LNG, which could require up to 50 ships if all of its 26 million tonnes were exported ex-ship.

Tarek Souki, the company's senior vice-president for LNG marketing and trading, tells TradeWinds that for the volumes that Tellurian expects to handle, the figure is likely to be closer to 20 to 30 LNG carriers, although he adds that it is unclear how things will evolve over the next four years before the project is scheduled to start up.

Souki says the company has always contended that it is going to be integrated across the value chain and, as such, it is not enough to build a 26-million-tonne-per-annum (mtpa) facility then show up in 2022 without all the components, including the shipping, in position.

“We certainly need to have the systems and people and expertise in place to be able to accomplish that,” he said.

3943134922e9536ea0a9035332539246 Tellurian Investments founder Martin Ho  Photo: Tellurian

Tellurian announced on Monday that it had fixed its first LNG carrier. The company took Maran Gas Maritime’s 160,000-cbm Maran Gas Mystras (built 2015) on time charter for a period of six months.

London-based Souki declines to reveal a rate on the vessel or detail if there are any optional periods attached to the charter.

He says Tellurian has been looking at the shipping market for quite some time now and has been “somewhat measured” in how it has approached fixing its first vessel.

He says that once Tellurian started looking at the charter rate, the cargo boil-off rate and the ship’s speed, it felt a tri-fuel diesel-electric (TFDE) vessel was the most suitable for what the company is trying to accomplish at present.

“The primary purpose of this is to set up our logisitics and our capabilities,” he said.

“The importance here was to understand the shipping market and work with a ship that was fairly modern but with technology that has been tested and that is something that we can utilise in the market for very basic type of transactions,” Souki said.

The executive says there tends to be a bifurcated structure on the tonnage available, with TFDE and dual-fuel diesel-electric competing against steam-turbine LNG vessels.

This is then broken down further among the steam ships depending on their age and efficiency. He adds that M-type, electronically controlled, gas-injection — or ME-GI — and XDF ships are starting to constitute another emerging category as they deliver.

Souki says some steam ships can make sense for companies with a very balanced portfolio, where routes are known and how these fit into cost structures.

“We don’t have any of those things yet,” he said. "We’re just getting started.”

He says internally there are quite a few eyes on his team, so the focus is on taking delivery of this first ship and working with it. He declines to give details about how the company intends to trade it.

Tellurian talks vessels as it charters first LNG unit

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But the marketing and trading chief, who is the son of Tellurian co-founder Charif Souki and who joined the company from the marketing arm of US LNG producer Cheniere Energy, has seen how quickly time runs away in the period before a project starts up.

“For the model we are trying to create, it is paramount that we build up that capability to be as efficient as possible as we get closer to 2022,” Souki said. “That’s why we are starting now and not waiting another year.”

He says the company will build up its shipping experience incrementally. He believes in leaving the ownership of vessels with shipowners.

“I’m very happy to be a charterer,” he said. "Once [we] get out to 2019 to 2020, we will start looking very seriously at our own home position as to how we are going to trade.

"In 2022, if we are looking at needing six to seven ships to commission the first few trains, I don’t want to not have had that experience in 2020 or 2021.”