Venture Global’s pyrrhic victory
HOT TAKE: Court ruling clarifies legal grey area, at the expense of long-term trust between buyers and sellers
For half a century, LNG deals were stitched together not just by lawyers, but by trust. Long-term supply contracts were personal as much as legal, built on the belief that when the ink dried, both sides knew what the deal meant. The Venture Global-Shell arbitration ruling has torn a seam in that fabric.
Venture Global yesterday claimed victory in a landmark arbitration case brought against it by oil major Shell, which had sought billions of dollars in compensation over alleged breach of contract.
Shell accused VG of artificially delaying the official start of commercial operations at the Calcasieu Pass LNG plant in Louisiana in order to profit from stratospheric spot prices during the extreme market volatility of 2022 following Russia’s full invasion of Ukraine.
A tribunal disagreed, ruling in VG’s favour. The decision brings immediate clarity to a legal grey area that had until recently flown under the radar. But it portends greater friction for dealmaking in the high-stakes LNG business. And it could also spell trouble for Venture Global’s own long-term commercial prospects.
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