By Curtis Williams
HOUSTON (Reuters) – Venture Global Inc is about to start selling liquefied natural gas cargoes from a Louisiana export terminal to long-term customers rather than to the highest global bidder, but it plans to employ the controversial but lucrative practice at a new and bigger terminal that it is starting up.
On April 15, Venture Global will finally complete commissioning its Calcasieu Pass facility in Louisiana, which binds it to contractual obligations it signed while developing the facility.
Commissioning, or making sure a new plant’s systems are functioning as designed, takes months at many LNG facilities. It took three years at Calcasieu Pass, allowing Venture Global to sell large test cargoes to high bidders on the red-hot global market instead of to customers whose contracts called for them to pay less.
Shell, BP, Orlen, Edison and Repsol have filed arbitration claims saying Venture Global deliberately failed to fulfill their supply contracts, dragging its feet to commission the plant so it could profit from higher spot prices. Venture Global argued that a faulty power system delayed normal operations.
With commissioning of Calcasieu Pass imminent, Venture Global’s newer and larger Plaquemines LNG plant is ramping up production for the lucrative spot market. It started producing in mid-December. Venture Global says it will commission the plant in two-year phases, a timetable analysts say will boost its profit outlook.
“We still expect the vast majority of sales will be done on the spot market in 2025” for Venture Global, said Adam Baker, an energy analyst at research firm Morningstar.
Plaquemines is now producing at 140% of design capacity and in three months has already sold 29 cargoes at an average liquefaction fee of $7.26 per million British thermal units (mmBtu), according to an SEC filing last Thursday.
“One can reasonably see the company’s overall revenue increasing from LNG sales on the spot market from Plaquemines, and some revenue from Calcasieu Pass”, said Jason Feer, Poten and Partners’ business intelligence chief.
Venture Global’s revenues from LNG should double to $9.98 billion in 2025 from $4.972 last year, and keep growing through 2029 on larger volumes and strong prices, investment bank UBS said in a note to its clients last Friday.
The company expects to sell 550 cargoes on the spot market during the commissioning period from Plaquemines, with a margin of $5 to $6 a mmBtu, generating between $10 and $12 billion, UBS told investors.
Exxon Mobil, Chevron, and Orlen are among contracted customers for LNG supply from the Plaquemines facility but did not respond to a request for comment.
