Venture Global requested a one-year extension of its construction permit for Calcasieu Pass from the Federal Energy Regulatory Commission (FERC). The terminal is still undergoing commissioning although the final liquefaction blocks were placed into service in October 2023 and it has been producing LNG at expected levels consistent with full utilization for over a year.
Venture Global has said that it cannot place the terminal into service because of construction issues with some power equipment at the plant, even though the issues are not impacting the output. In the meantime, all the cargoes produced at the terminal have been commissioning cargoes, which Venture Global has been marketing by itself.
None of the long-term contracts can begin until commercial operations start, which has led to a dispute with the terminal’s offtakers, most of whom are involved in arbitration cases against Venture Global at this point. Venture Global has maintained that it had not violated any of its contractual agreements. The current construction permit for the terminal expired a few days ago, and Venture Global is asking that FERC either grant them an extension or say that the terms of permit have been fulfilled since the plant is producing LNG. The terminal’s offtakers are strongly opposed to this, as Venture Global continues to market the LNG produced at the facility without delivering any cargoes under the long-term contracts.
Offtakers have previously tried to get FERC or the Department of Energy (DOE) to intervene and force Venture Global to declare the terminal as being in service and start delivering cargoes under the contracts, but the regulators have declined to get involved in the disputes. However, this filing has brought that battle to the forefront once again. FERC has said it will accept comments on the extension and issue a decision within 45 days. From a total U.S LNG feedgas demand and output perspective, this decision is inconsequential. However, for Venture Global and its offtakers it’s extremely important. FERC will essentially be deciding if Venture Global will be allowed to continue to operate as if it were commissioning or if it must declare that the terminal is in service and deliver the LNG to the long-term offtakers. Results of the arbitration cases are still pending.
