Venture Global hits out at Shell as searchlight also beams on NLNG dispute

Venture Global LNG, the US-based energy producer, has hit out at Shell’s criticism of the track record of its liquefied gas facilities as the dispute over LNG supply has failed to abate.

Shell LNG is a major shareholder of Nigeria LNG, which is also involved in a supply dispute.

Riviera Maritime Media reports that the Venture Global facility conflict involves Shell, BP, REPSOL, Galp, and other European buyers of LNG.

The dispute, which has global ramification, emanated from the definition of commissioning cargoes from a new LNG facility — with implications for financing and future sales of LNG developments.

European LNG buyers allege that Venture Global denied the off-takers cargoes from its Calcasieu Pass facilities, leading to the loss of billions of dollars.

The European off-takers have a 20-year sale and purchase agreement with the terminal, representing eight million tons per annum (mtpa) of the terminal’s total planned 10 mtpa offtake.

In 2019, the agreed pricing was around $2 per million British thermal units (mmBTU) but by August 2023, spot prices had spiked to $89 per mmBTU.

This led to an impressive profit margin exceeding $100 million per LNG cargo.

Venture Global LNG saw this as an opportunity to sell cargoes at prices far higher than the long-term agreements.

According to the report, Venture Global LNG claimed that if the cargoes were provided to Shell, Galp, Edison, and others, they would have been sold on the spot market with no benefit to Calcasieu Pass.

The report said the dispute became intense when Shell, BP, and others wrote to the EU-US Task Force on Energy Security, requesting intervention and accusing Venture Global of “opportunistic” actions.

Venture Global responded with a letter to the task force, maintaining that Shell and others had previously bought and allegedly traded commission LNG cargoes for profit outside of Europe.

Venture Global alleged Shell had an “abysmal record of failed execution at its own LNG facilities where they are a major shareholder or a construction leader”.

It told the EU-US Task Force that the dispute was “the latest in a series of unsuccessful attempts to bully an industry newcomer into waiving contractual rights to increase their own profits beyond recent record highs”.

Venture Global positions itself as a long-term, low-cost provider of US LNG from resource-rich North American natural gas basins.

Shell LNG, meanwhile, is a global player and a major shareholder in Nigeria LNG (NLNG).

In a separate case, the NLNG has been held to be in a contract breach.

A London arbitration panel recently found Nigeria LNG in breach of contract for failing to deliver 19 cargoes of LNG under a contract it executed in January 2020.

The panel was made up of John Beechey CBE, J William Rowley KC and Nevil Phillips.

The enforceability of the arbitration award is being challenged by Nigeria LNG in the UK High Courts.

It was earlier reported that the Venture Global’s allegation against Shell and others is similar to the Nigeria LNG breach.

Shell and others have separately filed arbitration cases against Venture Global LNG at the London Court of Arbitration.