TotalEnergies CEO Patrick Pouyanne revealed that the French major LNG player has rejected opportunities to become a long-term customer of Venture Global LNG because it did not trust the US-based LNG supplier.
TotalEnergies CEO Patrick Pouyanne revealed that the French major LNG player has rejected opportunities to become a long-term customer of Venture Global LNG because it did not trust the US-based LNG supplier. “I don't want to be in the middle of a dispute with my friends, with Shell and BP."
The US LNG producer has been in deep dispute with its main LNG buyers: BP, Shell, Edison, Repsol, Galp Energia and others since nearly 3 years ago over its “deliberately” delaying the commercial operations date (COD) of the Calcasieu Pass project, which the European buyers believe has "detrimental consequences" for energy security in Europe at a “critical time”.
Earlier, Shell had called Venture Global's behavior "deceptive practices" that are "harmful and dangerous to the industry."
Venture Global has repeatedly rejected the buyers’ claims saying its plant is not fully operational due to faulty power equipment that is being repaired as it is entitled to sell "commissioning" cargoes for its own accounts under the contracts.
It had earlier notified its Calcasieu Pass project’s contractual off-takers that the COD of the project has been postponed again, this time to the first quarter 2025.
The 11.25 MMT/Y Calcasieu Pass exported its first LNG cargo to France in March 2022 and remains in the commissioning mode so far as Venture Global has been selling all cargoes in the spot markets.
In an interview with Global LNG Info Analytics in September 2023,
Mostafa Sharif, Gas Market Senior Advisor, projected that Venture Global’s practice has serious consequences for it and damaged its reputation in the market.
“Now the pivotal question is how Venture Global could repair its badly damaged bridges of trust with major LNG players and, more importantly, how to create bridges of trust with new customers?”
“The world LNG business has been underpinned by long-term mutual understanding, interest and certainly commitment. This is an unprecedented level of mistrust in the LNG business that the counter-parties have to go to court or arbitration before the deal started.”
Reuters cited Pouyanne as saying that Venture Global had approached Total, initially to see if it would be interested in a long-term supply contract for LNG from its Calcasieu Pass and then from Plaquemines LNG plants, but he had rebuffed that offer out of a lack of trust.
"The price of the LNG was so low," he said. "I said to my colleague, How is it possible to pay $1 less than the rest of the market? What is the trick?"
Some market sources suggest that Venture Global is improving its first project’s poor economy by postponing its COD and selling the cargoes on the spot markets at higher prices.
Just before sanctioning of the Calcasieu Pass in August 2019, Global LNG Info Analytics had assessed that the project’s IRR would be between -1.5% up to 5.5%, depending on the proceeding costs. “The company has offered aggressive pricing formulas in its LNG sale deals (reportedly less than US$2/MMBTU) and as the project’s EPC contract was a turnkey contract, it has to bear most of the project’s cost escalations risk.”
Venture Global has to market a huge volume of uncommitted LNG to be produced by its under-development export projects while it anticipates to increase its LNG production to 70 MMT/Y by the end of this decade.
However, since June 2023 when the company signed its latest LNG sales deal with German former Gazprom subsidiary SEFE, it has not yet announced any new final LNG sales contract.
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