Shell accuses Venture Global of wrongfully earning $3.5 billion

Shell claimed that LNG producer Venture Global unfairly made $3.5 billion from the sale of commodities from long-term contracts on the spot market.

According to a report by the Financial Times, Shell commissioned a study “to assess how much more revenue Venture Global unfairly gained by denying certain European customers contracted cargoes”.

Shell did not stop there, however. He went on to claim that Venture Global had caused serious LNG supply difficulties for the company which had to resort to sourcing gas from five other US producers, incurring additional costs of $1.5 billion, the FT report also said . The report identified Poland’s state-owned energy company Orlen as the most exposed to Venture Global’s tactics.

The supermajor is one of several companies suing Venture Global for failing to deliver commodities contracted under long-term agreements and instead selling the gas on the spot market, using a loophole that allows it to trade in the spot market before for its installation to be officially completed. Venture Global sought to extend the construction period of its Calcasieu Pass LNG plant.

Once the Calcasieu Pass facility is officially recognized as completed and fully operational, Venture Global should begin developing its long-term contracts with Spain’s Shell, BP and Repsol.

The three supermajors, 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 Louisiana site in exchange for the company’s commitment to supply them with certain volumes of LNG per a long period of time.

The facility has a capacity of 10 million tonnes and started production in early 2022 – just in time for Europe, which was starting to face a shortage. But instead of honoring its contracts with European buyers, Venture Global chose to sell more LNG on the spot market.

By Irina Slav for Oilprice.com

More top reads from Oilprice.com