Shell Loses Legal Claim against US LNG Operator Venture Global

SEATTLE (Oil Monster):  Venture Global has won an important arbitration case, defeating Shell’s claims that it broke contracts to profit from higher prices, in a boost to the one of the largest US suppliers of liquefied natural gas.

It is one of several arbitration cases pursued by customers of Venture Global, which allege it failed to deliver shipments under long-term supply contracts and instead sold them for higher prices on the spot market when gas prices soared following Russia’s full-scale invasion of Ukraine.  

The customers — which include Shell, BP, China’s Sinopec and several European energy companies — lodged damages’ claims for between $6.7 to $7.4bn against the LNG provider and sought arbitration at the International Chamber of Commerce.

Venture Global has said contractual provisions limit the total liability for these claims to about $1.6 billion, although this is disputed by some of the customers.

The first arbitration ruling could set a precedent for the remaining cases, analysts say, and clarify the contractual obligations of LNG providers to foundation customers that sign long-term supply contracts to enable providers to finance construction of gas facilities.

Venture Global, which was founded by ex-banker Michael Sabel and lawyer Robert Pender, has shaken up the global LNG industry by expanding rapidly and becoming embroiled in a bitter public dispute with industry heavyweights, Shell and BP.

But the company, which has close ties with the Trump administration and contributed $1mn to the president’s inaugural campaign, faces challenges following a lacklustre initial public offering in January.

Venture Global shares rose around 6 per cent in after-hours trading following the decision, but still trade at less than half of its IPO price of $25.

The company has denied that it violated its supply contracts, arguing that it was not obliged to ship cargoes to its long-term customers because its LNG facility in Louisiana, called Calcasieu Pass, had not started commercial operations when it sold cargoes on the spot market.

The company declared force majeure on its contractual commitments on the grounds that the facility’s power supply equipment needed repair, despite shipping its first cargo in March 2022.

BP, Shell, Sinopec, Poland’s Orlen, Portugal’s Galp, Spain’s Repsol and Edison rejected this argument, noting that Venture Global sold hundreds of cargoes before finally commissioning Calcasieu Pass for full commercial operations in April 2025.  

On Tuesday, Venture Global said it was pleased with the ICC tribunal’s decision.

“We have consistently honoured these agreements without exception,” said the company. “Venture Global’s unique ability to incrementally export commissioning cargos during the construction of our facilities has brought LNG to market years faster than ever before and strengthened global security.”   

Shell said it was disappointed with the outcome but respected the tribunal’s decision.

“Trust in long-term contracts is the bedrock of the LNG industry and essential for continued investment and sustainable growth,” the company said.

Courtesy: www.ft.com