Venture Global LNG Inc. CEO Michael Sabel said some of the company’s long-term offtakers are attempting to undermine the new exporter’s competitive edge in pointed comments published Tuesday by the Financial Times.
Sabel’s comments are some of his strongest yet in what’s become a very public dispute with offtakers that have accused the company of failing to deliver contracted liquefied natural gas.
Sabel told the Financial Times that Venture Global is a "catastrophe" and "competitive threat” for the companies alleging contract violations. LNG market heavyweights and supermajors BP plc and Shell plc have joined Repsol SA and Edison SpA in arbitration proceedings against the Gulf Coast exporter.
“First they ignore you — and we had many years of being ignored. And they ridicule you and call you all sorts of names,” Sabel told the British newspaper. “And then, when they see you start to execute and have success, then they have to figure out how to slow you down. And we’re at that stage.”
Venture Global’s 10 million metric tons/year (mmty) Calcasieu Pass terminal loaded its first commissioning cargo early last year. However, it has yet to declare that the facility is complete and commercially operable, which would require it to begin supplying cargoes to its long-term offtakers.
Since then, it has sold 226 cargoes on the spot market, according to Kpler data, during a time of high international gas prices.
The offtakers have claimed Venture Global has wrongfully profited by selling cargoes on the spot market and violated their contracts. In an appeal for the U.S.-European Union (EU) Task Force on Energy to intervene in the dispute, the companies said Venture Global has "shaken confidence" in all U.S. LNG suppliers.
Sabel pushed back by telling the Financial Times that customers haven’t lost trust in the company as they’ve continued signing up to buy volumes from the company's other projects. Venture Global is also building the 20 mmty Plaquemines LNG export terminal in Louisiana. It has more than 90% of supplies contracted from the proposed CP2 export project, which would also be located in the state.
Sabel said the companies challenging it are likely doing so out of fear of a “historic price change” Venture Global is helping to create in the market.
He also echoed the company’s response to the task force last month by saying “the supermajors have not successfully executed development and construction of a large-scale project maybe ever,” requiring them to grow LNG volumes through trading instead of liquefaction.
In a response to the companies’ appeal to the U.S.-EU task force last month, Venture Global said 70% of its commissioning cargoes have gone to Europe, helping to provide much needed natural gas at a time when the continent is working to replace Russian imports.
The company called the offtakers’ request for the task force to intervene “outrageous,” saying it was “nothing more than the latest in a series of unsuccessful attempts to bully an industry newcomer into waiving its contractual rights in order to increase their own profits beyond recent record highs.”
The company also said Shell, the world’s largest LNG trader with stakes at plants across the world, has an "abysmal record of failed execution at its own LNG facilities" that have left the market short of cargoes.
“Even though it has no contractual right to do so, we believe Shell is likely targeting Venture Global’s commissioning volumes principally because the replacement cost for its own catastrophic execution mistakes is so high,” the company wrote in a letter to the task force.
Venture Global has said its modular technology at Calcasieu Pass is taking longer to bring online than more conventional LNG plants. It has claimed ongoing reliability challenges and problems with new technology, mainly issues with power supply equipment, have to be fixed before it can start commercial operations.
The company has said it expects to start providing cargoes under long-term contracts later next year.
