Venture Global buys LNG shipping fleet to market fuel worldwide

VENTURE Global LNG, the United States liquefied natural gas (LNG) exporter embroiled in a dispute with several of its customers, is acquiring nine LNG carriers and expanding its sales operations to market their cargoes.

Venture Global will become the first American LNG producer to purchase a fleet rather than charter or lease vessels, with the first two ships expected to be delivered this year, founder and chief executive officer Mike Sabel said. The move opens the door for the company to sell cargoes directly into the spot market without using trading houses or intermediaries, allowing it to boost profits and giving it a fresh edge over competitors.

Shell and some of Venture Global’s other customers have accused the company of selling highly profitable spot cargoes from its new Louisiana export facility while dodging obligations to contracted buyers. Venture Global maintains it has been in compliance with its contracts.

The company will add 50 to 100 people to manage the newly acquired fleet of South Korean-built ships and sell the cargoes, Sabel said.

“We are long LNG, and we mostly right now view this as just selling LNG rather than traditional traders, where they buy LNG from some producers and sell it to others,” he said. “Over time, we will look for opportunities where we will trade cargoes between basins, and that will develop naturally.”

Sabel declined to comment on the cost of the specialised ships, which in recent months have fetched prices as high as US$281 million each.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

Venture Global is on its way to becoming one of the biggest US LNG exporters and is trying to boost flexibility in how it sells its fuel. Its second plant – Plaquemines, in Louisiana – could enter production as soon as this year.

While most of Venture Global’s exports were sold via long-term contracts, the company has been selling LNG from its first export plant on the spot market while the facility undergoes its start-up commissioning process. That process typically takes several months, and while it continues, plants can sell any fuel produced on the spot market. Once a plant enters full service, long-term contracts must be fulfilled first.

Venture Global first began shipping LNG cargoes from the facility – Calcasieu Pass, also in Louisiana – in early 2022, coinciding with Russia’s invasion of Ukraine and the subsequent jump in spot LNG prices. But Venture Global says the plant cannot enter commercial operations until the fourth quarter of this year, due to technical issues.

That means the company has sold more than 250 shipments into the spot market from the facility, fetching higher prices than it would receive under long-term contracts. That has upset customers such as Shell and Repsol, who have not received shipments under their contract terms, triggering an arbitration dispute with Venture Global. BLOOMBERG