BP, Edison, Shell ask US, EU to intervene in Venture Global LNG dispute -November 11, 2023 at 05:06 pm EST
HOUSTON, Nov 11 (Reuters) – BP, Edison
and Shell pressed a U.S.-EU energy group to intervene
in a dispute with liquefied natural gas exporter Venture Global
LNG over the U.S. firm’s failure to deliver contract supplies of
the fuel.
The companies appealed to the U.S.-EU Task Force on Energy
Security last month, and a Shell executive urged them to require
Venture Global LNG to “immediately begin to perform” under their
signed contracts.
The three are among at least four customers of the
Arlington, Virginia, firm pursuing contract arbitration claims
over a lack of gas supplies. Venture Global LNG has said the
Louisiana plant is not fully operational due to faulty power
equipment that is being repaired.
Their appeals sought to get The Hague and Washington to
pressure Venture Global LNG on the contracts. In its letter,
Shell accused Venture Global LNG of diverting resources into
building a second LNG export plant rather than completing
repairs to its first plant.
The behavior “has shaken confidence in the trustworthiness
of American LNG suppliers,” BP executive Carol Howle wrote in a
separate letter. Whether the plant should be allowed to operate
and export under rules governing construction should be explored
by officials, she added.
NO ACTION BY TASK FORCE
Officials from the EU and U.S. indicated they view the
dispute as “a contractual matter between commercial parties,” a
Venture Global LNG spokesperson said on Saturday. No action was
taken on Shell’s request at an Oct. 30 task force meeting.
A Shell spokesman said on Saturday it was not expecting an
immediate reaction by the task force, and wanted to bring a
potential loss of trust in U.S. LNG to officials’ attention. BP
declined comment apart from its letter. Utility giant Edison did
not immediately reply to a request for comment on the weekend.
Venture Global LNG is operating the Calcasieu Pass plant at
capacity, it has told U.S. regulators. And it has sold more than
200 cargoes worth about $18.2 billion to date, according to a
Reuters tally. Those sales reaped higher prices than would be
available under the four firms’ long-term contracts.
Shell and others claim the firm has profited from the rally
in global gas markets while short-changing Europe’s energy
security. They have been told they will not receive their
contracted amounts until late 2024.
BP and Shell have bought gas from the plant and sold it
outside of Europe while citing Europe’s energy security in
letters to the U.S.-EU task force, Venture Global LNG said. The
company is “diligently working toward full completion.” It did
not say when full commercial operation would begin.
“Shell has purchased 7 commissioning cargoes from Venture
Global and 3 of them were traded outside of Europe for higher
profits. Similarly, BP has purchased 6 commissioning cargos, and
2 have been traded to destinations outside of Europe,” according
to a Nov. 10 letter signed by Venture Global Co-Chairman Michael
Sabel and Robert Pender.
The exporter is in compliance with terms of its contracts
and the criticisms by BP and Shell represent an attempt to
“litigate this through our regulators and in the media,” the
letter said.
The appeal to the U.S.-EU task force also follows Repsol’s
bid to have the U.S. energy regulator Federal Energy Regulatory
Commission reopen its approval of the Calcasieu plant in view of
the startup problems. That request was rejected.
(Reporting by Gary McWilliams; editing by Diane Craft)
