{"id":12592,"date":"2023-11-11T14:20:13","date_gmt":"2023-11-11T14:20:13","guid":{"rendered":"https:\/\/infundpros.com\/business\/oil-majors-call-on-washington-and-brussels-to-intervene-in-lng-dispute\/"},"modified":"2023-11-11T14:20:13","modified_gmt":"2023-11-11T14:20:13","slug":"oil-majors-call-on-washington-and-brussels-to-intervene-in-lng-dispute","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=12592","title":{"rendered":"Oil majors call on Washington and Brussels to intervene in LNG dispute"},"content":{"rendered":"<div>\n<p>Stay informed with free updates<\/p>\n<p class=\"article__content-sign-up-topic-description\"><span>Simply sign up to the <!-- -->Oil &amp; Gas industry<!-- --> myFT Digest &#8212; delivered directly to your inbox.<\/span><\/p>\n<p><iframe class=\"article__content-sign-up-iframe close\" scrolling=\"no\" id=\"signUpIframe\" data-prev-url=\"\/register\/in-article-sign-up?ft-content-uuid=90891fb9-9bb9-4777-8b10-5e071514ea09&amp;concept-id=9f991f8b-1d17-4d99-82f4-0cd8fe50b59b\"><\/iframe><\/div>\n<div id=\"article-body\">\n<p>Shell and BP have asked Washington and Brussels to intervene in a bitter dispute with Venture Global LNG, warning the company\u2019s refusal to honour a multibillion-dollar liquefied natural gas supply contracts threatens Europe\u2019s energy security.<\/p>\n<p>In correspondence seen by the Financial Times, the oil majors accuse the US LNG provider of \u201cmisconduct\u201d for withholding cargo agreed under long-term supply contracts and instead selling LNG on the spot market. <\/p>\n<p>Shell alleges Venture Global\u2019s \u201copportunistic\u201d action has enabled it to reap an $18bn windfall because of a spike in gas prices following Russia\u2019s invasion of Ukraine while denting its ability to meet critical energy supply needs in Europe.<\/p>\n<p>The accusations have sparked a war of words, with Venture Global branding as \u201coutrageous\u201d the companies\u2019 \u201crequest for interference\u201d from the governments in binding contracts.<\/p>\n<p>The supermajors, alongside Spain\u2019s Repsol and Italy\u2019s Edison, are among several foundation customers embroiled in contract arbitration with Venture Global. Foundation customers agree long-term contracts that help LNG providers attract financing to build their projects.<\/p>\n<p>The European energy groups are all seeking to force the US company to deliver the contracted cargo or pay financial penalties under a process that could take years.<\/p>\n<p>The call for intervention from the joint EU-US Task Force on energy security \u2014 set up after Russia\u2019s invasion of Ukraine to spur US gas exports to Europe \u2014 marks a significant escalation of the dispute. The body is headed by senior officials, including Ditte Juul J\u00f8rgensen, director-general for energy at the European Commission, and Amos Hochstein, US President Joe Biden\u2019s senior adviser on energy.<\/p>\n<p>Shell said in a letter to the officials seen by the FT: \u201cSuch short-sighted, unprecedented conduct sets a concerning precedent that could erode market confidence and delay investment in the US LNG export infrastructure that is still critically needed to support Europe\u2019s energy security.\u201d<\/p>\n<p>The letter authored by Steve Hill, executive vice-president of Shell Energy, and dated October 27 urges the task force to press Venture Global to cease its \u201cunjustifiable and damaging\u201d actions and honour its long-term supply agreements. <\/p>\n<p>A separate letter from BP concurred with Shell\u2019s position. \u201cVenture Global\u2019s conduct has shaken confidence in the trustworthiness of American LNG suppliers at a critical time,\u201d wrote Carol Howle, BP\u2019s executive vice-president of trading and shipping.<\/p>\n<p>In its own letter to the officials, dated November 10, Venture Global said it was \u201chonouring its contractual obligations to its long-term customers in strict conformity with its long-term contracts\u201d.<\/p>\n<p>\u201cIt is nothing more than the latest in a series of unsuccessful attempts to bully an industry newcomer into waiving its contractual rights in order to increase their own profits beyond recent record highs,\u201d Mike Sabel, the company\u2019s chief executive, and Bob Pender, co-chair, wrote.<\/p>\n<p>Venture Global\u2019s first LNG facility, Calcasieu Pass, located on the Gulf coast in Louisiana, commenced producing LNG in January 2022 and exported its first cargo two months later. But the company argues it has not yet started full commercial operations and is not obliged to supply foundation customers until the commissioning is completed. <\/p>\n<p>It has declared \u201cforce majeure\u201d on its contractual commitments on the grounds that the facility\u2019s power supply equipment needs repair.<\/p>\n<p>Shell said the company\u2019s excuse does not withstand scrutiny, as the facility has delivered more than 200 cargo shipments to customers. The nearly 600-day commissioning period for Calcasieu Pass defies industry standards, it added.<\/p>\n<p>In its letter, it alleges Venture Global\u2019s conduct \u201cthreatens to undermine the very objectives\u201d of the task force, which is to boost Europe\u2019s energy security. Venture Global retorted that as one of the few companies to successfully finance, commercialise and build capacity it has been \u201cintegral\u201d to the increase of US gas exports. <\/p>\n<p>Edison has also written to the task force requesting it \u201cuse all of its powers\u201d to force Venture Global to supply the cargo. It accused the company of \u201cprofiteering\u201d at the expense of European customers.<\/p>\n<p>Edison cites a report by Wood Mackenzie which forecast Venture Global stands to gain $17.5bn from the short-term market sales, compared to $2.8bn it would receive under long-term contracts with foundation customers. <\/p>\n<p>\u201cThis issue is no longer a private dispute between companies,\u201d said Edison in a letter seen by the FT. \u201cRather it is exacerbating an energy crisis affecting the lives of everyday European citizens. It can no longer be overlooked.\u201d<\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.ft.com\/content\/90891fb9-9bb9-4777-8b10-5e071514ea09\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Stay informed with free updates Simply sign up to the Oil &amp; Gas industry myFT Digest &#8212; delivered directly to your inbox&#8230;.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[],"class_list":{"0":"post-12592","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-business"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Oil majors call on Washington and Brussels to intervene in LNG dispute | inFundPros<\/title>\n<meta name=\"description\" content=\"Stay informed with free updatesSimply sign up to the Oil &amp; 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