Edison says H1 profit down due to LNG delivery delay from Venture Global

Italian energy firm Edison, a unit of EDF, said that its profit declined in the first half due to a delay in liquefied natural gas deliveries from Venture Global LNG’s Calcasieu Pass plant in the United States.

Edison closed the first half of 2023 with a net profit of 187 million euros ($207.1 million), down 7 percent compared to a net profit of 201 million euros in the first half of 2022.

The firm attributed this decline to expenses attributable to territorial regeneration activities on the ex-Montedison sites and said that these overall results were also affected by a “strong negative impact” deriving from the delay in the LNG deliveries from the US, which led the company to start an arbitration dispute.

It did not provide more details regarding the impact from deliveries.

Edison said it launched arbitration proceedings in May this year against US LNG exporter Venture Global at the LCIA in London, for the failure of LNG deliveries from the US.

Back in 2017, Edison agreed to buy 1 million metric tons per annum of LNG for a period of 20 years from Venture Global’s Calcasieu Pass LNG export facility in Cameron Parish, Louisiana.

BP, Shell, Repsol

Besides Edison, Reuters reported that energy giants BP and Shell also launched arbitration proceedings against Venture Global regarding the delay in LNG cargo deliveries.

BP and Shell each have 20-year deals with Venture Global for 2 mtpa of LNG from the Calcasieu plant.

Both Shell and BP declined to comment.

“We have no comment on the existence or status of any arbitration proceedings,” a Shell spokesperson said.

Spain’s Repsol also signed a 20-year SPA with Venture Global for 1 mtpa of LNG from the same plant.

The firm last month asked the US FERC for a rehearing over its previously denied motion to secure access to filings regarding the commissioning of the plant.

Repsol says that Venture Global continues to export cargo after cargo of LNG from the export terminal, but it has not declared that construction and commissioning of the project have been completed and that commercial operation has been achieved.

The firm said granting the motion would allow it access to critical filings regarding commissioning and construction that Venture Global has filed as privileged, so that Repsol, as a long-term customer, can “assess whether Venture Global is complying with the requirements of the 2019 authorization order.”

First commissioning cargo left in Q1 2022

Calcasieu Pass produced its first LNG on January 19, 2022, moving from FID to LNG production in 29 months, and the first commissioning cargo left the facility on March 1.

In July last year, Venture Global received FERC approval to introduce fluids into the Block 9 liquefaction modules at its Calcasieu Pass plant.

With this, Venture Global received approvals to commission all the 18 modular units configured in 9 blocks.

The plant has a capacity to produce 10 mtpa of LNG or 1.3 billion cubic feet per day (Bcf/d).

Besides Shell, BP, Edison, and Repsol, Calcasieu Pass has contracts with Galp, PGNiG, Sinopec’s unit Unipec, as well as CNOOC.

“Phased commissioning process”

In March this year, Venture Global said it had shipped 128 commissioning cargoes from its Calcasieu Pass plant since the first quarter of last year, mostly to Europe, while the firm still works to launch commercial operations at the facility.

“As a first-of-its-kind facility, Calcasieu Pass’s commissioning process has looked different than any other American LNG facility to come before it,” the firm told FERC in a filling.

“In particular, because of its modular, midscale design and on-site power generation (among other reasons), the facility requires substantial testing and a phased commissioning process before it can be expected to be fully operational and confirmed to be prepared to reliably meet its long-term contractual obligations,” Venture Global said.

While Calcasieu Pass is able to produce LNG, it remains in the commissioning phase because it continues to face “periodic reliability challenges impacting the facility,” it said.

LNG Prime invited Venture Global to comment on the Edison statement and to provide an update regarding the launch of commercial operations at the Calcasieu Pass plant.

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