Venture Global Triumphs Over Shell in LNG Arbitration Quarrel
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Venture Global Inc. prevailed over Shell in an arbitration case about a contract dispute, capping a two-year fight between the oil giant and the liquefied natural gas exporter.
Venture Global said in an Aug. 12 statement that an arbitration tribunal had ruled in its favor. The company’s shares rose 6.7% after the close of regular trading in New York.
The ruling is a crucial win for the Arlington, Va.-based company and marks the first significant decision in a series of arbitration cases that have pitted the LNG upstart against some of the world’s biggest energy companies. While other cases are pending, the initial win is a resounding breakthrough for Venture Global.
“We are pleased with the tribunal’s determination which reaffirms what Venture Global has maintained from the outset — the plain language in our contracts, mutually agreed upon with all of our customers, is clear,” the company said in its statement.
The disputes hinge on deals Venture Global negotiated to sell fuel from its first export plant in Louisiana, named Calcasieu Pass. The facility began producing LNG in 2022. But instead of providing cargoes to customers with long-term contracts, Venture Global sold them directly into the spot market, where prices were at a record high.
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The company justified the move, saying the contracts permitted it to sell LNG into the spot market before the plant was fully operational and still in its “commissioning phase.” But it nonetheless outraged companies that had signed 20-year deals with Venture Global.
The disputes led to arbitration cases filed by Shell, BP, Polish utility Orlen, Portugal’s Galp Energia, Spain’s Repsol, Edison International and China’s Sinopec. The initial claims against Venture Global totaled nearly $6 billion.
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Shell said it was disappointed with the tribunal’s decision. “Trust in long-term contracts is the bedrock of the LNG industry and essential for continued investment and sustainable growth,” the company said in a statement.
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 the growing ranks of U.S. LNG project developers.
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More than three years after the plant 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.
By then, the uncertainty over the arbitration cases cast a pall over the company’s IPO in January. It was the worst-performing large energy public offering in at least the last 30 years. The stock fell on the day it debuted, then posted the worst first month of trading of any energy-sector IPO over $1.5 billion since at least 1993, falling 39%.
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