Venture Global Sinks After Losing to BP in Fight Over LNG Sales
(Bloomberg) — Shares of Venture Global Inc. fell the most in seven months after the U.S. liquefied natural gas exporter lost a dispute over cargo sales with BP Plc, a major customer.
The stock fell 23% on Friday, its biggest drop since March, after the arbitration court ruled that Venture Global violated its contract with BP by selling LNG on the spot market from a facility in Louisiana rather than to customers with long-term agreements. BP is seeking more than $1 billion in damages.
“The market is pricing in the risk of further adverse decisions,” Schneider Capital Group said in a research note. Unresolved claims could exceed $5 billion, he said.
The decision comes just eight weeks after Venture Global prevailed in a similar dispute with Shell Plc and another customer recently reached a settlement.
The setback raises uncertainty about the financial health of Venture Global, which aims to become the largest U.S. LNG exporter amid ongoing customer disputes. Other plaintiffs include Poland’s Orlen SA, Portugal’s Galp Energia SGPS SA, Spain’s Repsol SA, Italy’s Edison International and China’s Sinopec.
“This has always emerged as a gray area where the outcome depends both on the specific wording in the contracts and on the arbitrator involved,” said energy analyst Saul Kavonic of MST Marquee. “A different arbitrator and likely different contract wording saw a different outcome here compared to the similar recent Shell case in which VG won.”
It was stated in the file that a hearing on compensation is expected to be held in 2026. Venture Global said it considered all available options and the decision did not affect contract terms.
Venture Global’s Calcasieu Pass facility begins exports in 2022. These customers claim that instead of supplying to contract buyers, the company sold cargoes on the spot market during a period of record prices. Venture Global cited mechanical issues that delayed full business operations. Deliveries to long-term customers began earlier this year.
Shell, Orlen and Repsol are customers of Venture Global’s second export facility, Plaquemines, which is now in production. Venture Global has signed a number of new contracts this year with clients including Germany’s SEFE Energy GmbH and Malaysia’s Petroliam Nasional Bhd from its third plant in Louisiana, known as CP2. Construction of the first phase of CP2 has started.
“None of the CP1 acquirers want to tear up their contracts; current conditions are too favorable to give up,” Schneider Capital Group said in a note.
Uncertainty arising from arbitration cases cast a shadow over Venture Global’s initial public offering in January. This was the worst-performing major energy market debut in at least three decades. The stock fell on its first day, then fell 39%, marking the industry’s worst first month for new listings worth more than $1.5 billion since at least 1993.
Venture Global shares are down nearly 60% this year.
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