Venture Global, the second-largest exporter of liquefied natural gas (LNG) in the United States, recorded a nearly 20% share price drop following an unfavourable arbitration ruling in its dispute with BP. The arbitration panel found that the company had breached its contractual obligations by delaying the declaration of commercial operations at its Calcasieu Pass terminal in Louisiana.
Billions of dollars at stake for other clients
This legal setback comes amid rising tensions with other long-term buyers. According to Venture Global’s 2024 annual report, several customers including Shell, Edison, Galp, Repsol and Orlen have launched arbitration proceedings seeking more than $4bn in compensation. These claims are largely tied to delayed LNG deliveries, as the company prioritised more lucrative spot market sales before the official start-up of the site.
While Shell previously lost its arbitration case against Venture Global, the ruling in BP’s favour has reignited concerns about the outcome of other disputes. BP is seeking over $1bn in damages, plus legal fees and interest, with the final amount to be decided in a separate hearing scheduled for 2026.
Potential financial and contractual consequences
Venture Global has warned that future or ongoing arbitration losses could result in substantial financial penalties and potentially trigger early repayment clauses in its LNG project financing. However, the company noted that none of the claimants have requested contract termination to date.
The dispute centres on the interpretation of contractual clauses, particularly regarding the operational status of Calcasieu Pass. The company maintains that the terminal has not yet reached commercial operations, which it says delays the activation of long-term contracts. The arbitral panel ruled that Venture Global failed to act “reasonably and prudently” in declaring operational status.
Ongoing uncertainty in the LNG market
The market sell-off, which could erase up to $6bn in valuation, adds to a 58% drop in share price since the company’s January IPO. This has fuelled investor concerns over the contractual management of major LNG projects amid growing global demand.
Analysts have pointed to possible differences in contractual language as a factor in the varying outcomes of the arbitration cases, particularly noting that BP’s agreement may have been more restrictive. Edison and Repsol have confirmed their intention to continue arbitration proceedings. Orlen stated only that proceedings with Venture Global are ongoing.
Venture Global said it would continue to defend its legal position vigorously and is evaluating all available options.
