Venture Global started producing LNG from a facility in Louisiana in January 2022, shortly before Russia’s invasion of Ukraine sent gas prices soaring amid a global scramble to replace Russian gas.
The American company had contracts to sell the LNG from the Calcasieu facility once it was fully operational to international buyers such as BP, Shell, Galp and Edison at much lower prices.
Venture Global did not declare the formal start of commercial operations until more than three years later in April 2025, however, enabling it to continue selling the LNG itself at higher spot prices in the market in the meantime.
Like those wind farms that haven’t picked up their CfD contracts given that market prices were higher than strike.
Tsk.
BP is seeking more than $1 billion in damages after a surprise arbitration victory against an American liquefied natural gas producer it accused of breaking supply contracts to cash in on high prices during the gas crisis.
Har har har.
“The surprising element is that Venture Global recently defended a similar arbitration with Shell, with the different outcome in this instance suggesting that the language may have been more tightly defined in the BP contract.”
This is the thing that continually gets me as the years go by: that people in positions with huge responsibility (in this case drawing up billion-dollar contracts) turn out to be so useless at their jobs. Public sector, private sector, everywhere: there are bluffers who sail through life well-paid and well-respected despite a trail of cock-ups and disasters; while every lax decision or error of judgement on my part seems to have brought immediate and unrelieved disaster.
I’d be perfectly happy to see Global Ventures go bust as a consequence. And its directors go to jail.
I’m a supporter of capitalism but I’d be an even stronger one if more Directors and Executives ended up in pokey. A decade or so of severe punishment would improve their standards of behaviour I’m sure. Incentives matter, don’t they?
Is this different to airlines who hedge the price of fuel in advance but then screw the supplier when the price is below the hedge because “they are a big important customer”?
Never heard of declaring start. What is that process?
I suppose it’s like digging a mine. While you’re putting the shaft and tunnels and railway line in, you’re still digging the stuff out in order to get down there, you may as well sell that stuff as you’re going rather than just dump it in a big heap. You’re not fully operational until the mineshaft is all the way to the bottom and the railway line (as in our local case) is there, but you’re still pulling stuff out of the ground in order to get down there and build the (in our local case, underground) railway line.