Chevron has requested to submit an opinion about a possible delay in the start-up of Venture Global’s second LNG plant, as the supermajor worries any delay would interfere with its delivery plans under a long-term contract with Venture Global.
Venture Global has requested regulatory authorities to postpone the official commissioning of Plaquemines LNG to 2027 from 2026, due to an adverse impact on the work from the Covid pandemic from five years ago. The Plaquemines LNG plant will have a capacity of 27.2 million tons of liquefied natural gas per year.
“To be clear, this request to FERC for an extension of our in-service deadline at Plaquemines has no impact on our publicly announced expectations for the commercial operations date of Phase 1 and Phase 2, which remain the same,” Venture Global said in a statement cited by Reuters.
Chevron, however, appears to be worried it could face the same fate as BP, Shell, Eni, and half a dozen other energy companies that saw their cargos significantly delayed while Venture Global sold millions of tons of LNG on the spot market. The company did that by delaying the official commissioning of its first LNG plant, Calcasieu Pass, which it argued freed it from any obligations under long-term contracts.
The argument worked in Shell’s arbitration case against Venture Global, where the court sided with the latter. It did not work with another arbitration case, brought against the U.S. LNG producer by BP, which is asking for over $1 billion in compensation. The total sought in damages from Venture Global by its long-term clients is over $4 billion. The company has warned that any unfavorable court ruling would lead to contract cancellations and faster repayment of loans taken out to build its LNG facilities, from the long-term buyers of the commodity.
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In this context, it is unsurprising that Chevron has acted pre-emptively to get as much clarity on how secure its future deliveries from Plaquemines LNG would be.
“Chevron has a substantial interest that may be directly affected by the outcome of this proceeding,” Chevron said in a statement.
By Irina Slav for Oilprice.com
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