The foundation customers of Venture Global LNG’s Calcasieu Pass liquefied natural gas export facility in Louisiana in the US are in for an even longer wait for their long-term contracts to commence, with the operator stating it now “anticipates that it will commence full commercial operations in the fourth quarter of 2024”.
The US Department of Energy last week denied Repsol’s late-filed motion to intervene in its dispute with Venture Global over the status of the Calcasieu Pass LNG facility for which the Spanish energy giant is one of several foundation customers.
The department’s Office of Fossil Fuel and Carbon Management rejected Repsol’s request to reopen regulatory approval of the LNG project, stating the company’s request was too late, adding the DOE does not determine the operational status of an LNG export project.
The department said that that decision is down to the Federal Energy Regulatory Commission (FERC), which authorises the facility to operate.
“[The] DOE has no basis to second-guess FERC’s determinations concerning the operational status of the project,” its decision read.
Calcasieu Pass’ long-term LNG customers are up in arms that the project has shipped more than 200 cargoes since early last year while Venture Global continues to maintain it has yet to start commercial operations — at which point their 20-year term contracts will come into effect and commence.
“Calcasieu Pass continues with its phased operational start-up that allows the export of LNG cargos as commissioning of the facility continues. Additionally, Calcasieu Pass is conducting necessary repairs and replacement of critical power generation equipment at the facility in order to complete the facility in preparation for full commercial operations,” said the project’s operator.
Venture Global recently again stressed that commissioning of the facility remains ongoing, adding that it is entitled to export cargoes during the commissioning stage.
The DOE, addressing Repsol’s arguments concerning the project, noted that Venture Global points to Calcasieu Pass’ “unique modular, midscale design” in explaining why its commissioning phase is continuing. The company states that, because of “the project’s unique design, phased construction and commissioning, and on-site power generation”, it “requires a lengthy commissioning process before it can be expected to be fully operational and confirmed to be prepared to reliably meet its long-term contractual obligations”, said the department.
Repsol’s growing frustration is shared with the project’s other foundation customers including European heavyweights Shell and BP, with the latter claiming the Calcasieu Pass facility has been operating commercially since 2022.
“It is publicly recorded that the facility was substantially complete no later than February 2023; we believe that is was in fact substantially complete much earlier,” said Carol Howle, BP’s executive vice president, trading & shipping.
“Specifically, on 21 February 2023, Venture Global confirmed that the facility was substantially complete under state law, issuing a notice in which the company did ‘declare and certify that the work required by the [engineering, procurement and construction contract with US contractor Kiewit] is substantially complete for any and all purposes contained in the Louisiana Private Works Act’,” she said.
Howle referenced the FERC’s findings from the US regulator’s letter dated 26 October 2023 as stating: “… the liquefaction facilities can operate above the authorised nameplate capacity and near the authorised maximum capacity…”.
In a letter to the US EU Task Force on Energy Security, Howle asserted that “Venture Global’s conduct has shaken confidence in the trustworthiness of American LNG suppliers at a critical time”, and she requested the task force’s support in promoting confidence in the integrity of contracts and international business norms.
Shell and Edison separately late last month had also appealed to the task force for its intervention in their dispute with Venture Global.
Against this backdrop, the Calcasieu Pass operator slammed Shell, pointing out that the company had actually bought some of its commissioning cargoes while publicly complaining about the project not yet commencing its long-term contracts.
“Venture Global shipped its first commissioning cargo at the start of March 2022. We bought some cargoes in the initial months of operation and sent most of those to Europe,” a Shell spokesperson confirmed to Upstream.
“[However], more than 20 months after their first cargo, Venture Global’s claim to still be commissioning a facility that, according to publicly available data, has been producing at around nameplate capacity for more than a year is simply unbelievable and increasingly untenable.”
One industry source described Venture’s Global focus on Shell as a distraction tactic, stressing that the key issue is the company’s refusal to meet its promises of serving as a reliable and affordable supplier of LNG to a range of European customers.
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