Venture Global sinks after BP's arbitral win raises concerns over pending disputes

Venture Global's shares fell by about 20% Friday, after the U.S. exporter of LNG lost an arbitration against BP for failure to meet a long-term contract. This stoked fears of similar verdicts with other customers who are suing for billions of dollar compensation.

The recent victory of Venture Global in an arbitration against Shell was a shock to BP.

BP wants more than $1 billion plus interest and legal fees in damages. The final amount will be determined at a separate hearing scheduled for 2026.

Venture Global, second largest U.S. supplier of liquefied gas, faces other arbitration claims from customers who are seeking compensation for more than $4 billion in relation to the delayed start-up commercial of the Calcasieu Pass Project, according to its 2024 annual report.

The company warned previously that losing arbitration cases in the future or current ones could lead to significant financial penalties. It also said that some gas supply contracts would be terminated and project debts would have to be repaid faster.

Venture said that all of the companies who filed arbitration proceedings are seeking compensation and none have asked to terminate their contract.

The difference between the Shell and BP cases is not clear. It could be due to different contracts or legal strategies.

Gabriel Moreen, of Mizuho Securities, called the ruling "a negative surprise," stating that it creates uncertainty for remaining claims.

If current losses continue, Friday's decline could wipe out $6 billion of the company's valuation. The shares have dropped more than 58% since the January IPO.

Stocks are also down due to investor caution about LNG risks.

Venture Global will expand its production to meet the growing global demand. The U.S. is expected to become the top LNG supplier for the world by 2023.

CALCASIEU SPOTLIGHT PROJECT

The arbitration claim was filed by BP, Shell, Italy's Edison, Portugal's Galp and Spain's Repsol. Orlen, a Polish company, also accused the U.S. firm of profiteering, selling LNG cargoes for higher spot prices than long-term contracts.

Edison and Repsol said they would continue to pursue their arbitration cases against Venture Global. Orlen refused to comment, but stated that it is still in arbitration with Venture Global.

Venture Global stated that Calcasieu Pass had yet to reach commercial operation status and was still in the process of starting up. Contracts for long-term agreements do not come into effect until the plant is commercially operational.

Citi called the result "unexpected" and said that BP's contract, which was more restrictive, likely played a role in the outcome.

Venture Global reported on Thursday that the International Chamber of Commerce International Court of Arbitration had found it in breach of its obligations to declare commercial operation had begun at Calcasieu Pass Plant as soon as possible and act "reasonably and prudently"

The company stated that it will vigorously defend its position and is evaluating every option. (Reporting from Vallari Srivastava, in Bengaluru; additional reporting from Marwa Rashan, in London; Francesca Landini, in Milan; and Marek Strzelecki, in Warsaw. Editing by Sriraj Kaluvila.)

(source: Reuters)