BP Asks U.S. Regulator to Intervene in Escalating Natural-Gas Feud
Summary
Venture Global is being accused of skirting disclosure rules while maintaining “a veil of secrecy around its operations” to the detriment of some customers.
British oil giant BP asked U.S. energy regulators to intervene in an escalating dispute with a startup U.S. natural-gas exporter whose feud with customers has become one of the industry’s nastiest battles in years.
BP in a Monday filing with the U.S. Federal Energy Regulatory Commission accused Venture Global LNG of skirting FERC disclosure rules while maintaining “a veil of secrecy around its operations" to the detriment of long-term customers.
The administrative filing asked the regulator to force Venture Global to disclose documents related to its delay in delivering cargoes of liquefied natural gas to BP and other long-term buyers. Amid that delay, Venture Global has profited handsomely from shipping a steady stream of LNG cargoes to other buyers at higher prices, surpassing $14 billion in sales, during a longer-than-normal ramp-up for an LNG plant.
BP said in the filing that the reasons Venture Global has given for postponing selling cargoes to long-term customers “are disingenuous and are not credible." The company wants FERC to force the release of documents about Venture Global’s plant on Louisiana’s Gulf Coast that the company has asked to keep confidential.
BP already has a private arbitration claim against Venture Global, which it filed in December 2022, a spokesman previously told The Wall Street Journal.
“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," BP said Monday.
In response, Venture Global spokeswoman Shaylyn Hynes said in a statement that the complaint had no merit and described it as an attempt to use a federal energy regulator to advance BP’s own interests in a commercial dispute.
“BP’s repeated efforts to publicize that dispute show the weakness of its contractual position," she said, adding that Venture Global would be submitting a formal response to the complaint to FERC in due course.
Arlington, Va.-based Venture Global surprised many industry insiders by building one of the world’s largest gas exporters within a decade. It pulled that off, in part, thanks to early long-term supply contracts signed with BP, Shell and other big buyers.
The contracts helped Venture Global obtain financing for the construction of its first LNG terminal, known as Calcasieu Pass.
BP, Shell and others argue that Venture Global is reneging on these contracts while taking advantage of rallying natural-gas prices since Russia’s February 2022 invasion of Ukraine. Venture Global has shipped more than 200 LNG cargoes since the start of March 2022 but has yet to start delivering chilled gas to BP and others under those early agreements.
Venture Global’s chief executive officer, Michael Sabel, told the Journal last month that industry incumbents are bullying the company as it is shaking up the way business is done. “We are so busy executing, and winning, and being successful," Sabel said in a late-November interview at Venture Global’s second LNG plant near New Orleans.
JPMorgan Chase credit analysts in July estimated Venture Global was valued at around $90 billion at the time. Sabel and his partner are majority owners of the privately held company.
Venture Global has marketed itself as a faster, cheaper LNG supplier compared with rivals. Sabel said the company has been transparent with customers, and is working out technical issues at Calcasieu Pass. Until those are fixed, he said, the plant can continue to produce LNG but cannot reliably start fulfilling long-term contracts.
But the complaining customers say Venture Global’s production volumes show the plant can, in fact, reliably operate. BP has called the company’s actions “a willful breach of our contract." A Shell spokesman said Venture Global “is clearly capable of fulfilling its contractual commitments; they simply choose not to."
Spain’s Repsol, one of Venture Global’s long-term customers, earlier this year asked U.S. Energy Department officials to reconsider FERC’s approval of Calcasieu Pass. The DOE rejected the requests, saying in part it didn’t have a basis to question FERC’s decision-making.
Venture Global has said in recent months it might not be able to start delivering gas to long-term customers, including BP and Shell, until late 2024.
Write to Jenny Strasburg at jenny.strasburg@wsj.com and Benoît Morenne at benoit.morenne@wsj.com
