Venture Global LNG has condemned Shell for its poor performance track record at its LNG facilities, as the dispute between European LNG buyers and Venture Global LNG escalates. According to a report by Riviera Maritime Media, the conflict involves Shell, BP, Repsol, Galp, and other European buyers of LNG.

The fundamental question in the dispute revolves around the definition of commissioning cargoes from a new LNG facility, which has implications for financing and future sales of LNG developments. European LNG buyers allege that Venture Global LNG, a U.S.-based company, denied them cargoes from its Calcasieu Pass facilities, resulting in billions of dollars in lost profits.

The European buyers had entered into a binding 20-year sale and purchase agreement with the terminal, representing 8 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), and by August 2023, spot prices for LNG surged to $89 per mmBTU, resulting in an impressive profit margin exceeding $100 million per LNG cargo.

Venture Global saw this as an opportunity to sell cargoes at prices far higher than the long-term agreements. They argued 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 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, highlighting that Shell and others had previously bought and traded commission LNG cargoes for profit outside of Europe. They also noted Shell’s “abysmal record of failed execution at its own LNG facilities where they are a major shareholder or a construction leader.”

Venture Global further stated to 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.

Conversely, Shell LNG is a global player and major shareholder in Nigeria LNG. 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, by a London based arbitrational panel made up of John Beechey CBE, J William Rowley KC and Nevil Phillips, it was further reported that the Venture Global’s alleged breach against Shell and others is similar to the Nigeria LNG breach.

The enforceability of the arbitration award is being challenged by Nigeria LNG in the UK High Courts. In addition, Shell and others have separately filed arbitration cases against Venture Global LNG at the London Court of Arbitration.