Venture Global's Plaquemines plant to produce first LNG ahead of controversial long commissioning

By Curtis Williams

HOUSTON (Reuters) - Venture Global LNG is on track to inaugurate liquefied natural gas (LNG) production at its Plaquemines export plant in Louisiana as soon as this week, LSEG data showed on Thursday.

This will mark the first new U.S. plant in two years to produce the superchilled gas, beating Cheniere Energy (NYSE:LNG )'s Corpus Christi midscale expansion project to market. It also kicks off a commissioning period of up to two years in which Venture Global retains all revenue from the shipments.

The 20 million metric tons per annum (MTPA) export plant was set to draw over 100 million cubic feet (mmcfd) of natural gas for the first time on Thursday, LSEG data showed.

U.S. regulators gave Venture Global permission on Thursday to commission its sixth of 18 blocks at Plaquemines, a document showed. Each block has two trains and utilizes 150 mmcfd of gas.

Some long-term contract customers of the Louisiana facility may wait up to two years to get their cargoes under the commissioning schedule, which extends to 2026 in the first phase and to 2027 in the second, a separate document showed.

Similar waits at another Venture Global plant, Calcasieu Pass, have led to contract disputes sent to arbitration by BP (NYSE:BP ), Shell (LON:SHEL ), Edison, Repsol (OTC:REPYY ) and Orlen. The disputes could cost Venture Global billions of dollars if it loses the cases, documents in a July offer of senior notes showed.

Having sales contracts in place for the LNG plant aided Venture Global's financing efforts for the new facility. But the company has earned increased profits by selling on the spot market. During commissioning, the company contends that the plant is not operating optimally and it is not bound to deliver contracted cargoes.

"A key element of our business strategy is to generate proceeds from the sale of LNG...prior to the relevant project achieving COD (commercial operation date)," Venture Global said in its offering. COD marks the end of commissioning.

Shell said its experience with Venture Global makes it view the LNG developer as "an unreliable supplier."

Exxon Mobil (NYSE:XOM ), EDF (EPA:EDF ), Petronas, and Chevron (NYSE:CVX ), which have announced purchase deals for Plaquemines, declined to comment.

Venture Global said Shell's criticism was "the height of hypocrisy," noting the late start of Shell’s Canada LNG plant.

"Our business model and plan for simultaneous operations ... has been disclosed to our customers, regulators and financial stakeholders," a Venture Global spokesperson said.

OVER BUDGET

The LNG exporter's first plant has been in commissioning mode since March 2022. Through December 2023, it sold 360 cargoes on the spot market, earning operating profits of $8.4 billion, a separate investor document showed.



Plaquemines has gone more than $2.3 billion over budget as the company seeks to stay on schedule. Venture Global plans to run the plant at 15% above nameplate capacity, bond documents showed.

Venture Global has not signed a new customer contract since June 2023, when Reuters reported that the company was facing arbitration with Italian electric company Edison .

Source: Investing.com