India's top gas importer, Petronet LNG, has renewed its initial deal to consider investing USD 2.5 billion in US liquefied natural gas (LNG) developer Tellurian Inc's Driftwood project, Indian sources familiar with the matter said. Petronet and Tellurian now have time until the end of December to finalize the deal, they said.

A memorandum of understanding that lapsed on May 31 was renewed last week ahead of a virtual meeting between Indian oil minister Dharmendra Pradhan and US Energy Secretary Dan Brouillette.

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.

The agreement was expected to be finalized by March 31. Tellurian later said the companies extended the deadline to May 31 to support Petronet's review process.

The deal is seen as part of wider cooperation between both countries. India is expanding its pipeline network and building LNG import terminals to encourage use of cleaner fuel.

Indian Prime Minister Narendra Modi has set a target to raise the share of gas in India's energy mix to 15 percent by 2030 from 6.2 percent 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 US 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.

Shares of Tellurian, which did not comment on the Petronet deal, were up 11% in early trade. Tellurian has said the USD 27.5 billion Driftwood project in Louisiana, which includes pipelines, is designed to produce 27.6 million tonnes per annum of LNG.

First Published:Jul 22, 2020 7:41 AM IST