RE: Oil majors call on Washington and Brussels to intervene in LNG dispute11 Nov 2023 14:51
The call for intervention from the joint EU-US Task Force on energy security — set up after Russia’s invasion of Ukraine to spur US gas exports to Europe — marks a significant escalation of the dispute. The body is headed by senior officials, including Ditte Juul Jørgensen, director-general for energy at the European Commission, and Amos Hochstein, US President Joe Biden’s senior adviser on energy.
Shell said in a letter to the officials seen by the FT: “Such 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’s energy security.”
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 “unjustifiable and damaging” actions and honour its long-term supply agreements.
A separate letter from BP concurred with Shell’s position. “Venture Global’s conduct has shaken confidence in the trustworthiness of American LNG suppliers at a critical time,” wrote Carol Howle, BP’s executive vice-president of trading and shipping.
In its own letter to the officials, dated November 10, Venture Global said it was “honouring its contractual obligations to its long-term customers in strict conformity with its long-term contracts”.
“It 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,” Mike Sabel, the company’s chief executive, and Bob Pender, co-chair, wrote.
Venture Global’s 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.
It has declared “force majeure” on its contractual commitments on the grounds that the facility’s power supply equipment needs repair.
Shell said the company’s 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.
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