Venture Global has recently notified its Calcasieu Pass LNG export project’s off-takers that the commercial operations date (COD) of the project has been postponed again, this time to the end of 2024, due to a “force majeure” notice issued by its power equipment provider.
Calcasieu Pass exported its first LNG cargo to France in March 2022 and remains in the commissioning mode so far as Venture Global has been selling all cargoes in the spot markets.
The project has exported 181 LNG cargoes about 11.1 MMT by the end of June 2023 (103 cargoes about 6.35 MMT in 2022 and 78 cargoes about 4.75 MMT in 2023-H1), according to Global LNG Info Analytics interpretation of US DOE data.
The 11.25 MMT/Y Calcasieu Pass LNG plant has eighteen electrically driven 0.626 MMT/Y liquefaction trains configured in 9 blocks.

 

Venture Global has said that Calcasieu Pass’ modular design requires a phased commissioning process before it could reach reliable capacity in accordance with its long-term LNG supply deals. But the project’s off-takers argued that the operator has deliberately delayed COD to earn billions of dollars by selling the cargoes in the more attractive spot markets in Asia and Europe.
Dispute over delayed COD has pushed the off-takers to take some measures like arbitration proceedings and/or court fillings to “protect their contractual rights”.

 

Mostafa Sharif, Senior Gas Market Advisor has remarked that the world LNG business has been underpinned on the long-term mutual understanding, interest and certainly commitment. “This is an unprecedented level of mistrust in the LNG business that the counterparties have to go to the court or arbitration before the deal started.”
Shell which is Venture Global’s major LNG buyer, called the company's behavior "deceptive practices" that are "harmful and dangerous to the industry."

 

Some market sources suggest that Venture Global is improving its first project’s poor economy by postponements of the COD and selling the cargoes in the spot markets at higher prices.
Just before sanctioning of the Calcasieu Pass in August 2019, Global LNG Info Analytics had assessed that the project’s IRR would be between -1.5% up to 5.5%, depends on the proceed costs. “The company has offered aggressive pricing formulas in its LNG sale deals (reportedly less than US$2/MMBTU) and as the project’s EPC contract was a turnkey contract, it has to bear most of the project’s cost escalations risk.”

 

Meanwhile, the ongoing dispute with current off-takers apparently hasn’t discouraged some new buyers for signing contracts with Venture Global’s under-development Plaquemines and Calcasieu Pass-2 (CP2) projects. The last one was German former Gazprom subsidiary SEFE.
At present, LNG oft-takers of the Calcasieu Pass are Shell, Repsol, Edison, Galp, BP, Sinopec, CNOOC, and PGNiG.

 

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