Repsol Escalates Calcasieu Pass LNG Dispute

Venture Global's Calcasieu Pass LNG export plant on the US Gulf Coast has been in its commissioning phase since February of last year — about four times longer than the industry norm — and offtaker Repsol is leading the charge to find out why.

The Spanish firm, whose offtake contract kicks in when commercial operations are declared, has asked the US Federal Energy Regulatory Commission (FERC) for a rehearing over its previously denied motion to gain access to filings regarding the commissioning and construction of the 10 million ton per year plant.

Cargoes have been loading from Calcasieu Pass since early last year, yet commercial operation remains elusive. Energy Intelligence understands that project commissioning usually takes three months or less.

Repsol requested the rehearing after its initial motion to obtain access to these “critical filings” was denied last month. The company has a 20-year supply agreement for 1 million tons/yr of LNG from the plant.

“The unprecedented circumstance of an LNG project conducting itself as commercially operational by exporting numerous cargoes over the course of a year, but not declaring commercial operation, is plainly cause for concern, particularly for a long-term customer like Repsol,” the company said in its rehearing request.

The dispute is sure to be closely watched given that Calcasieu Pass is the first of several Venture Global projects that are set to deliver 70 million tons/yr of eventual capacity. The company’s two-phase, 20 million ton/yr Plaquemines LNG is already under construction.

The unprecedented situation — no LNG project developer has ever incurred such a delay — is looking likely to get uglier before it gets better, a source close to the matter suggests.

A Year of Exports

The first commissioning cargo from the facility was lifted in February 2022, and since then, a total of 159 cargoes have been loaded from the plant, according to commodities analytics firm Kpler. The majority have headed to Europe.

Those cargoes amount to roughly 10.4 million tons of exports over a 15-month period, nearly the level of expected annual commercial exports.

But despite those high figures, Venture Global has not declared the commercial start-up of the plant, which would trigger the start of offtake agreements.

Repsol previously expected to receive first commercial cargoes from the plant at the beginning of 2023, Energy Intelligence understands.

Document Battle

In its request to FERC, Repsol argued that it should have access to the filings as a long-term customer of the facility in order to protect its interests and properly assess whether the US exporter “is complying with the requirements of the 2019 authorization order and making accurate representations to the Commission and its staff regarding the status of the project."

According to Repsol’s filing, Venture Global claimed that granting the Spanish firm's request may result in “some unspecified harm, prejudice or burden." Repsol countered that providing access to privileged documents to a participant is standard FERC practice.

“The only 'harm' that appears to motivate Venture Global’s opposition to Repsol’s participation in this proceeding is the transparency and accountability that would be made possible by Repsol’s participation in this proceeding during this post-authorization phase,” the Spanish company said.

Venture Global did not respond to Energy Intelligence email and phone requests for comment.

Lucrative Delay

Venture Global’s delay has fed industry speculation that the company has delayed the commercial start-up to capture higher profits by selling cargoes on the spot market.

Global spot LNG prices soared in the wake of Russia’s invasion of Ukraine in February 2022 as Europe rushed to secure alternative gas supplies. Spot LNG prices in Asia and Europe have fallen in recent months, but one Asian LNG trade source told Energy Intelligence that selling cargoes on the spot market just a month ago would have likely still earned Venture Global higher profits than loading cargoes to contractual offtakers.

Headed for Court

Energy Intelligence understands that Venture Global’s other offtakers have shared Repsol’s frustrations, as there is no contractual provision allowing Venture Global to delay declaring commercial operations. In that way, the contracts are similar to other standard offtake agreements, the source notes.

Without quick resolution, continued delays will likely land the dispute in court, with several parties exploring litigation, Energy Intelligence understands.