How BP won a $1 billion plus case against Venture Global
Five sources familiar with the case said that BP's $1 billion arbitration win against liquefied gas producer Venture Global was won by arguing unfair behavior by the U.S. firm. This strategy could be used in similar cases by other claimants.
BP won in October. Two months earlier, Shell had lost a similar lawsuit when it was unable to prove Venture Global's breach of long-term LNG agreements. Shell didn't push the argument that Venture Global acted unfairly in its arbitration.
Legal and industry experts say that lawyers across the industry are chasing the details of BP’s winning strategy, as four other companies vie for billions from Venture Global.
Roberto Lipari is Europe's head for litigation and dispute resolution, a law firm, and he said that arbitration awards do not set precedents, unlike legal cases. This means that the same cases can result in very different outcomes, depending on how counsel present the facts and how arbitrators understand them.
A DISPUTE ONE OF THE LARGEST IN INDUSTRY HISTORY
Shell, BP and Unipec took Venture Global before an arbitrator in one of largest disputes in the LNG industry's history.
Venture Global reported in January that the total claims of customers amounted $5.5 billion. This was before they won against Shell, lost to BP, and settled with China Unipec.
Venture Global, after losing the case, said that BP had sought damages in excess of $1 billion. A new hearing would be required to determine this amount. Venture Global stated in October that they believed the BP decision contradicted the findings of the Shell arbitral.
BP's Chief Executive Murray Auchincloss told analysts in a Tuesday call that the company has not disclosed publicly how much damages it seeks from Venture Global. He added that a date is yet to be determined for determining damages.
The (BP arbitration) result underscores Venture Global's growing legal exposure as multiple... dispute worth billions of dollar unfold in parallel, said Agnieszka Ason of the Oxford Institute for Energy Studies.
Venture Global is accused by the companies of not delivering LNG cargoes which were contractually required to be delivered.
The Russian invasion boosted demand for U.S. LNG
Venture Global sold more than 400 LNG cargoes between 2022-2025, as traders and industry sought out U.S. gas due to the lack of Russian supplies following the Russian invasion of Ukraine.
Another source familiar with the situation said that Venture Global claimed its Calcasieu Pass Liquefied Natural Gas plant in Louisiana is still in startup mode and not required to sell cargoes on long-term contracts.
The same source stated that Venture Global claimed the plant was only fully operational by April of this year, after it had been approved by regulators. Source: The company claimed that its long-term clients were aware that the gas would be sold on the spot market as production ramped up and that they had offered them cargoes in 2021.
BP, Shell Galp Edison and Orlen all declined to comment on this article. Repsol stated that arbitration is ongoing.
Two sources have confirmed that Unipec settled its case.
Shell and BP were heard in New York, under the rules of International Court of Arbitration. This court is under the umbrella of Paris-based International Chamber of Commerce.
Venture Global, after losing its case in the BP tribunal, said that the tribunal had concluded that Venture Global was not acting as a reasonable or prudent operator. It also breached the obligations it had to declare the beginning of commercial operations on time.
According to tribunal rules, the details of Shell and BP's hearings are confidential unless they are challenged in court.
Venture Global said that Calcasieu's Pass project differs from other projects in the industry because it has 18 trains instead of an average of 2 or 3 trains. This means that production can start more quickly, but ramp-up to full operation is slower.
(source: Reuters)