BP has won an arbitration case it brought against Venture Global, alleging that the LNG exporter had violated its long-term supply contract with the supermajor in order to make bigger profits on the spot market.
The development delivers a blow to Venture Global, which has become one of the largest exporters of liquefied natural gas in the United States in a matter of years, not least because it tapped the spot market right when demand for gas was soaring. The problem that BP and half a dozen other energy companies had with that was that they had long-term contracts with Venture Global and were not getting any deliveries.
To do that, Venture Global used a loophole that allowed it to delay the official commissioning of its liquefaction plant. This is what made it possible for the company to sell substantial amounts of LNG to spot market buyers and not deliver any volumes to its long-term clients—and funders of the facility.
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BP, Shell, and Spain’s Repsol, along with two other European energy companies, were foundation buyers for the Calcasieu Pass facility, meaning they provided Venture Global with the money to build the place in Louisiana in exchange for a commitment from the company to supply them with certain volumes of LNG over a long-term period.
Naturally, this did not sit well with BP, Shell, Eni, or Repsol, all of whom took the matter to arbitration court, accusing Venture Global of making billions from the above tactics while they had to source LNG from other suppliers.
Interestingly, just two months ago, the court looking into all the arbitration cases against Venture Global found in favor of the latter against Shell. The court said Venture Global had not violated its long-term contract with the supermajor by delaying the start of cargo deliveries.
By Irina Slav for Oilprice.com
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