Venture Global’s victory this week in its high-stakes arbitration case against Shell doesn’t mean LNG developers will have the upper hand in current and future negotiations with offtakers, industry analysts say.
“I don't think this result indicates that projects have gained additional leverage in contract discussions,” Jason Feer, head of business intelligence at Poten & Partners, told Energy Intelligence. “Once the issue of Venture Global's commissioning cargoes became known, many offtakers from projects under development sought changes to their contracts and/or HOAs [heads of agreement] to better define how that situation would be handled.”
This week, a New York arbitration panel ruled for Venture Global in a case brought by offtaker Shell over unfulfilled term deliveries from the developer’s Calcasieu Pass LNG terminal in Louisiana. Several similar cases with other large customers are pending.
The 10 million ton per year (1.4 billion cubic foot per day) Calcasieu Pass project started first production in May 2022, but it went through an unprecedented three-year commissioning period and declared the start of commercial operations only in April this year after several delays.
Shell has accused Venture Global of delaying the commercial start of the project in order to profit from selling a large number of commissioning cargoes in the higher-priced spot market. It has called Venture Global's actions "deceitful" and dangerous for the industry. CEO Wael Sawan said in March that foundation buyers who created the bankability for the project had yet to receive any cargoes, although Calcasieu Pass began commercial deliveries the following month.
