![]() ![]() ![]() ![]() The extended wait for Venture Global to start commercial service at Calcasieu Pass has rankled counterparties in Europe, to the point that some are considering other options for future contracts, according to market sources. ![]() Even as prices have fallen sharply since last summer's highs, recently to a 21-month low for delivered LNG to Northwest Europe, Venture Global has still been able to profit meaningfully, in part because of the steep drop in US feedgas costs. Instead, the terminal has remained in commissioning status, with Venture Global able to capture those same margins. The move to commercial service earlier would have eased the cost of filling their own consumption needs and given customers including Shell, Britain's BP, Spain's Repsol and Poland's PGNiG the ability to resell some supplies to capture the wide spread between what they would have been paying Venture Global and what they could have fetched for those volumes on the spot market. The long-term contracts carry some of the lowest fixed liquefaction fees among US exporters, with some agreements said to be below $2/MMBtu. When Northwest Europe delivered LNG prices rose to record highs last summer, to almost $75/MMBtu, Calcasieu Pass foundation customers began urging the operator to declare Calcasieu Pass ready for commercial service to allow their long-term contracts containing a fixed liquefaction fee to kick in. The early start, just 2.5 years after commercially sanctioning the project versus the four to five years that other US terminals have taken to build, meant that the operator would have a much longer runway before contracts required it to begin commercial service. With Calcasieu Pass, Venture Global charted a new path for developing a US LNG project by building the facility with modular trains that were constructed in Italy, shipped to the site of the facility, and installed, enabling the developer to reduce costs and start exporting cargoes in March 2022, about nine months to a year earlier than expected. Every one of the customers would have been delighted to have it at that time." "This was one of projects that came just in time," an Atlantic LNG market source said. However, sources said, the operator will still have some capacity to be used for spot volumes heading into 2024, maintaining the enviable position the operator has carved out in a highly competitive commercial environment. Recently, market participants have heard that Venture Global would start servicing long-term contracts for some foundation customers in July and others in the fourth quarter of this year. Some market participants have estimated revenue for the privately held company of as much as $15 billion so far, with profits in the billions after netting out feedgas, pipeline transportation and lifting costs. Revenue would have easily topped $10 billion based on average FOB cargo prices over the past year. The operator had shipped 138 cargoes from Calcasieu Pass as of March 21, S&P Global Commodity Insights trade flow data showed. The boon has made Venture Global a darling among its peers while at the same time irking some of the foundation customers who made Calcasieu Pass possible and believe the margins the operator has earned at the Louisiana facility over the last 12 months should have been theirs. Receive daily email alerts, subscriber notes & personalize your experience. ![]()
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