Venture Global wins arbitration case against Shell over LNG delivery failures
Shell, along with other companies such as bp, Edison and Galp, initiated arbitration claims in 2023, alleging that Venture Global capitalised on higher spot market prices by selling LNG cargoes, rather than fulfilling long-term contract obligations from its Calcasieu Pass export facility in Louisiana, US.
By November of the previous year, the collective value of the pending claims had approached $6bn (£4.43bn).
The accusations centred on Venture Global's supposed profiteering from commissioning cargoes on the spot market, which typically command higher prices compared to long-term contracts.
Venture Global, however, refuted these claims, attributing the delay in commercial operations to an electrical system fault that hindered optimal plant functioning.
Shell expressed its disappointment following the tribunal's ruling but acknowledged its respect for the decision:
Shell was quoted as stating: 'We are disappointed with the outcome but respect the Tribunal's decision.'
The importance of trust in long-term contracts was underscored by Shell, which described it as the cornerstone of the LNG industry, crucial for fostering sustained investment and growth.
Venture Global upheld that the tribunal's decision corroborated its stance of always honouring agreements with its customers.
'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.
'We have consistently honoured these agreements without exception. Our industry and the investors and lenders who underpin it, all rely on respect for both the sanctity of negotiated contracts and the experienced, objective regulatory and legal bodies that govern it. These principles will ensure our industry remains dynamic, fair and competitive, enabling the innovation and breakthroughs that benefit all market participants and the customers we serve,' Venture Global stated.
Earlier on Tuesday, Venture Global disclosed a potential penalty risk of up to $1.6bn in its second-quarter earnings report with some claimants in the arbitration having sought even higher penalties.
The company is also on track to potentially become the largest US LNG company by next year, contingent on the advancement of its CP2 project in Louisiana and sustained overproduction at its existing facilities.
"Venture Global wins arbitration case against Shell over LNG delivery failures" was originally created and published by Offshore Technology, a GlobalData owned brand.
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