Chevron has requested to submit an opinion on a possible delay in the start-up of Venture Global’s second LNG plant, as the major company is concerned that any delay will interfere with its delivery plans under a long-term contract with Venture Global.
Venture Global has asked regulators to postpone the official commissioning of Plaquemines LNG from 2026 to 2027, due to the adverse impact on work from the Covid pandemic five years ago. The Plaquemines LNG plant will have a capacity of 27.2 million tons of liquefied natural gas per year.
“To be clear, this request to FERC for an extension of our Plaquemines commissioning timeline has no impact on our publicly announced expectations for the Phase 1 and Phase 2 commercial operations date, which remain the same,” Venture Global said in a statement cited by Reuters.
Chevron, however, appears concerned that it could face the same fate as BP, Shell, Eni and half a dozen other energy companies that saw their shipments significantly delayed while Venture Global sold millions of tons of LNG on the spot market. The company did so by delaying the official commissioning of its first LNG plant, Calcasieu Pass, which it said freed it from any obligations arising from long-term contracts.
The argument worked in the Shell v. Venture Global arbitration case, where the court sided with the latter. It didn’t work out with another arbitration case, brought against the US LNG producer by BP, which is asking for more than $1 billion in compensation. The total damages sought from Venture Global by its long-term clients exceeds $4 billion. The company has warned that any unfavorable court ruling would result in contract cancellations and faster repayment of loans taken out to build its LNG facilities by long-term buyers of the commodity.
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In this context, it is not surprising that Chevron acted preemptively to obtain the greatest clarity on how safe its future deliveries of Plaquemines LNG would be.
“Chevron has a substantial interest that may be directly affected by the outcome of this proceeding,” Chevron said in a statement.
By Irina Slav for Oilprice.com
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