A Week After High-Profile MoU, Questions Cloud Petronet-Tellurian Deal

Shares of Indian PSU tanked amid concerns over prices, lack in demand and long-term lock-in period of investment without final agreement

- Suhasini Haidar T.C.A. Sharad Raghavan

One week after it was announced with considerable fanfare at the start of Prime Minister Narendra Modi’s visit to the United States, several loose ends are yet to be tied up in the $2.5 billion (₹17,668 crore) investment planned by Indian PSU Petronet in American LNG company Tellurian.

According to information with The Hindu, the first sign of trouble for the deal came at the signing itself on September 21, when it became clear that what was signed in the presence of Mr. Modi was not the actual agreement, but only a second Memorandum of Understanding (MoU).

On February 14, Petronet and Tellurian had already signed an MoU for 5 million tonnes of LNG a year and an 18% equity stake. Tellurian Inc. had promised to “make a final investment decision and begin construction in the first half of 2019” for its Driftwood LNG project in Louisiana and had been negotiating to complete the agreement in time for Mr. Modi’s visit.

Asked why the deal could not be signed in time, Tellurian said the current MoU was more focused, without giving details of how it differed from the previous one.

“Petronet had been evaluating what type of volumes they needed and were ready to get more specific with this MOU. Over the coming months, we will be negotiating contract details and aim to complete documentation in March 2020,” senior vice-president, public affairs, and communication at Tellurian Inc., Joi Lecznar, stated in written replies to The Hindu.