Venture Global Confident It Will Win Other LNG Cases
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Venture Global Inc., set to become the top U.S. exporter of liquefied natural gas, is confident it will win the remaining arbitration cases on supply from its first plant in Louisiana after a victory over Shell Plc.
The company on Aug. 12 said it won arbitration proceeding with Shell related to the timing of contractual shipments from the Calcasieu Pass plant, which came more than three years after the project began exporting the fuel. The shares jumped as much as 15% on Aug. 13.
“We remain confident of similar outcomes in the balance,” CEO Mike Sabel said on an earnings call Aug. 13. The contracts and their terms are all “very similar” and “straightforward,” as are the facts around the plant construction and completion, even if the cases are heard in separate tribunals, he said.
The triumph over Shell was a crucial one for the company — the first resolution in a series of arbitration cases that have pitted the LNG upstart against some of the world’s biggest energy companies. The other cases were filed by BP Plc, Polish utility Orlen SA, Portugal’s Galp Energia SGPS SA, Spain’s Repsol SA, Edison International and China’s Sinopec.
From left: Venture Chief Operating Officer Brian Cothran, U.S. Energy Secretary Chris Wright, Louisiana Gov. Jeff Landry, U.S. Interior Secretary Doug Burgum and Venture founder Mike Sabel tour Venture's Louisiana facility. (Kathleen Flynn/Bloomberg)
The disputes hinge on deals that Venture Global negotiated to sell LNG from Calcasieu Pass, which began producing in 2022. Instead of providing cargoes to customers with long-term contracts, Venture Global sold them directly on the spot market, where prices were at record highs.
Venture Global argued the move was justified as contracts permitted it to sell LNG on the spot market before the plant was fully operational and still in its “commissioning phase.” It nonetheless outraged companies that had signed 20-year deals.
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Venture Global said in April that it had completed the commissioning phase at Calcasieu Pass and would start supplying fuel to its long-term customers.
“We consistently honored agreements without exception,” Sabel said on the call Aug. 13.
Venture Global is now producing LNG also from the Plaquemines plant, which remains in the commissioning stage, and the company aims to start the first phase of commercial operations in the fourth quarter of next year, according to a presentation. The plant is ramping up production faster than expected.
CP2, the company’s third project now under construction, is expected to produce its first LNG in late 2027 and achieve commercial operations in the third quarter of 2029. The final investment decision on the project’s second phase is slated for next year.
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The cost estimates for CP2’s phases one and two has been “modestly” raised to between $28.5 billion and $29.5 billion due to higher interest rates, Chief Financial Officer Jonathan Thayer said on the call. The previous guidance was $27 billion to $28 billion. Supply chain inflation and uncertainty on tariffs are affecting phases two and three of the project, Sabel said.
Still, Venture Global expects to continue signing long-term LNG supply contracts this year, as it aims for additional 20-year deals for supply from CP2, the CEO added.
