Venture Global Suffers Defeat in BP’s LNG Arbitration
Loss Comes as Surprise Because 8 Weeks Earlier, Venture Prevailed in Similar Fight With Shell
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Venture Global Inc. lost a dispute with BP Plc involving the sale of liquefied natural gas cargoes, a surprise defeat that comes eight weeks after the U.S. LNG exporter prevailed in a similar fight with Shell Plc.
An arbitration tribunal ruled in favor of BP’s objection to Venture Global’s sale of LNG cargoes from a Louisiana facility on the spot market rather than to customers with long-term contracts, according to a filing Oct. 9. BP is seeking more than $1 billion in damages, the filing said.
“The company is disappointed by the arbitration tribunal’s decision,” Venture Global said in its filing. “The company is currently evaluating all available options in response to the tribunal’s ruling and will continue to vigorously defend our position.”
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The company’s shares plunged as much as 15% after the close of regular trading in New York.
BP issued a brief statement saying it was pleased with the outcome.
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“We appreciate the arbitration panel’s thorough review and fair judgment,” the company said. “We look forward to the next phase of the arbitration process, which will determine the damages to be paid to BP.”
Venture Global also disclosed in its filing that it had resolved an arbitration dispute with another customer that it didn’t name. The settlement “has no material impact,” Venture Global said.
BP, Shell and other long-term contract holders lodged arbitration claims against Venture Global after its Calcasieu Pass LNG complex on the U.S. Gulf Coast began exports in 2022. Instead of sending cargoes to those customers, the exporter sold them directly into the spot market at a time of record prices.
At the time, the exporter cited mechanical issues that prevented on-time contract execution even as cargoes continued to depart the plant. Shipments to long-term contract clients got underway earlier this year.
Besides BP and Shell, other Venture Global customers that lodged arbitration claims include Polish utility Orlen SA, Portugal’s Galp Energia SGPS SA, Repsol SA, Edison International and Sinopec.
Co-founders Mike Sabel and Bob Pender launched Venture Global in 2013. They were initially viewed as outsiders to the Houston energy industry and a long shot bet to join the growing ranks of U.S. LNG project developers.
More than three years after the plant first began shipping cargoes, 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.
Nonetheless, uncertainty from the arbitration cases cast a pall over the company’s initial public offering in January. It was the worst-performing major energy market debut in at least the past three decades. The stock fell on its first day, then posted the worst first month of trading out of any new listing in the sector worth over $1.5 billion since at least 1993, falling 39%.
As of the Oct. 9 close, Venture Global shares were down about 50% this year.
