Venture Global LNG's customer fight shifts contract discussions
HOUSTON, Aug 9 (Reuters) - The standoff between U.S. LNG developer Venture Global LNG and its energy customers over the start of commercial shipments has caused liquefied natural gas buyers to broadly review their contract terms, according to developers and experts.
BP, Shell, and Edison International have filed arbitration cases against Venture Global LNG over its failure to supply fuel under long-term contracts even as Venture Global LNG shipped some 177 cargoes to non-contract customers in the last 16 months.
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Venture Global LNG has blamed equipment failures for its inability to supply them with liquefied natural gas (LNG) cargoes despite twice-a-month shipments. It calls the shipments to date "pre-commission cargoes."
The definition of commissioning has become more acute since the dispute began, said Anatol Feygin, executive vice president at Cheniere Energy. Cheniere is the largest U.S. LNG exporter and is actively negotiating contracts that underpin its many expansion projects.
"Commercial discussions are much more focused on how to ensure the counterparty performs," said Feygin.
A Venture Global LNG spokesperson did not reply to a request for comment on contract talks. The company has said it "remains in full compliance with its long-term contracts."
The point at which LNG cargoes become available to buyers under long-term agreements has taken on greater importance in light of the Venture Global LNG standoff, said Ira Joseph, a Global Fellow at Columbia University's Center for Global Energy Policy.
"It will be a focus now for long-term buyers," Joseph said.
Japan's biggest power generator, JERA, which in April signed a contract to take future cargoes from the second phase of Calcasieu Pass, declined to comment on its contract terms. Another recent contract signer, Germany's Securing Energy for Europe, or SEFE, did not immediately respond to requests for comment.
LNG shipping and brokering firm Poten & Partners said customers pursuing new deals are focused on ensuring their right of first refusal for additional and commissioning cargoes is explicit in LNG agreements, said Jason Feer, global head of business intelligence.
(Reporting by Curtis Williams in Houston; Additional reporting by Yuka Obayashi in Tokyo; Editing by Alexandra Hudson)