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Venture Global announced on Tuesday the partial final award issued by the International Chamber of Commerce, International Court of Arbitration in the arbitration proceedings between Venture Global Calcasieu Pass and Shell NA LNG regarding LNG sales from the Calcasieu Project under the LNG sales and purchase agreement entered into by the two firms.
“We are pleased with the tribunal’s determination which reaffirms what Venture Global has maintained from the outset–the plain language in our contracts, mutually agreed upon with all of our customers, is clear,” Venture Global said.
“We have consistently honored these agreements without exception. Our industry and the investors and lenders who underpin it, all rely on respect for both the sanctity of negotiated contracts and the experienced, objective regulatory and legal bodies that govern it,” the company said.
“Venture Global’s unique ability to incrementally export commissioning cargoes during the construction of our facilities has brought LNG to the market years faster than ever before, it said.
Calcasieu Pass produced its first LNG on January 19, 2022, moving from FID to LNG production in 29 months, while the first commissioning cargo left the facility on March 1, 2022.
In April, Venture Global launched commercial operations at its Calcasieu Pass LNG terminal, some 68 months from its final investment decision and 38 months after production start.
$6.7 billion and $7.4 billion
Venture Global said in its results report on Tuesday that it expects a decision in one of the arbitration proceedings “imminently.”
Venture Global said that the Calcasieu project is involved in disputes and arbitration proceedings with “certain of its post-COD SPA customers.”
“Such customers are asserting, among other claims, that the Calcasieu project was delayed in achieving COD under our post-COD SPAs,” it said.
According to Venure Global, the remedies sought by these customers include damages ranging between $6.7 billion and $7.4 billion, rather than the termination of the post-COD SPA.
These disputes are subject to the relevant seller aggregate liability cap of approximately $1.6 billion under the relevant post-COD SPAs.
Shell, BP
LNG Prime invited Shell to comment on the arbitration decision.
“We are disappointed with the outcome but respect the Tribunal’s decision,” a Shell spokesperson said.
“Trust in long-term contracts is the bedrock of the LNG industry and essential for continued investment and sustainable growth,” the spokesperson said.
In March, Shell’s CEO Wael Sawan said the company expects to have an update on an arbitration dispute with Venture Global later this year.
Sawan said at the time that Venture Global’s Calcasieu Pass LNG plant had already delivered “400 plus cargoes,” and the facility is “running at or above nameplate capacity.”
He noted that the “foundation buyers who created the bankability for that venture are not yet getting any cargoes.”
“The legal process is ongoing. We hope to be able to have some readout from the arbitration in the coming months. So hopefully this year, and then we’ll see where that goes,” he said.
BP’s CEO Murray Auchincloss recently also said in February that BP expects a ruling on the arbitration dispute Venture Global to be delivered in the second half of this year.
BP has a 20-year LNG contract for volumes for the Calcasieu Pass LNG terminal in Louisiana, the same as Shell.
The two firms and other Calcasieu Pass customers have been in a dispute with Venture Global over the launch of commercial operations at the facility since 2023.