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BP has approached the Federal Energy Regulatory Commission for assistance in a dispute between the supermajor and Venture Global, the LNG producer that several energy majors are suing for breach of contract.
In a filing from Monday, BP said Venture Global had evaded FERC disclosure rules and had maintained “a veil of secrecy around its operations” at the expense of its long-term clients, the Wall Street Journal reported.
BP, along with Shell, Repsol, Eni, and Edison, became foundational buyers of Venture Global’s LNG even before it started producing. They paid for the construction of the Calcasieu Pass facility and secured long-term supply from it in a more or less standard deal for the industry.
Venture Global, however, has delayed deliveries to these clients while selling LNG on the spot market, which has made it billions. As for the delay in deliveries to the long-term customers, Venture Global explained it with force majeure because of technical problems with the power supply. As they learned these problems hadn’t stopped the company from producing enough LNG to sell on the spot market, the European buyers got a bit angry.
The five are currently involved in an arbitration case against the U.S. company, which has responded with its own accusations of lack of sportsmanship.
“We are a catastrophe for them,” Venture Global’s CEO, Mike Sabel, told the Financial Times earlier this month. “This is a reaction to this competitive threat and they — as in any market — need to figure out how to be competitive.”
Now, BP is asking FERC to force Venture Global to disclose the documentation around its force majeure—which Venture Global wants to keep confidential.
“Venture Global’s conduct has shaken confidence in the trustworthiness of LNG suppliers at a critical time, and is harming the stability and growth of the LNG industry,” the supermajor said.
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By Irina Slav for Oilprice.com
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Related Knowledge Center: Liquefied natural gas
Driven by plentiful natural gas produced from shale plays, the United States began exporting liquefied natural gas in 2016 when the Sabine Pass terminal in Louisiana opened and shipped its first cargo. Since then, additional capacity, or trains, have been added to Sabine Pass, and terminals have become operational in Cameron Parish, La.; Hackberry, La.; Cove Point, Md.; and Corpus Christi, Texas. The Energy Information Administration projects that U.S. LNG export capacity will reach 8.9 billion cubic feet per day (Bcf/d) by the end of 2019, making it the third largest in the world, behind Australia and Qatar. The tariff war with China has the potential to impact some final investment decisions for additional terminals in the coming months.