Venture Global LNG ships first export cargo from Calcasieu Pass in US

Venture Global LNG's Calcasieu Pass shipped the first commissioning cargo from the US export facility March 1, bringing new supply to the global market at a time when Europe is seeking to shore up tight inventories while also breaking its reliance on Russian gas.

The Yiannis tanker, controlled by a trading subsidiary of JERA, departed the Louisiana terminal at around 2:30 a.m. local time, more than three weeks after it arrived, the company said.

Six years after the first US LNG cargo produced from shale gas was shipped from Cheniere Energy's Sabine Pass, located along the same Gulf Coast corridor as Calcasieu Pass, the country is vying to become the world's biggest exporter of the super-chilled home heating and power plant fuel. The US is expected to reach that milestone in 2022.

With prices high and volatile amid Russia's invasion of Ukraine, and the West imposing harsh sanctions as punishment, the market, and Europe in particular, is eager for additional incremental US LNG volumes. In a joint statement with Venture Global, JERA said the Calcasieu Pass cargo aboard the Yiannis would help ease "the supply-demand balance of LNG amid the tight global market."

Traders and a market source with knowledge of the tanker's movements said they believe the cargo will likely stay in the Atlantic Basin, possibly Europe. JERA has access to an import terminal in France. Japan, meanwhile, responding to US and EU requests, said Feb. 9 that it would divert some surplus LNG cargoes to Europe.

The Yiannis' captain estimated March 16 for the tanker's arrival at its next port, Platts cFlow trade-flow analytics software showed. A US Gulf Coast to Northwest Europe LNG tanker voyage currently takes about 12 days, versus 24 days to East Asia, according to Platts shipping data. It is not unusual for cargoes destined for one country to change course while en route, to capture a better netback for the offtaker.

Using modular liquefaction trains that were built in Italy and shipped to Calcasieu Pass to be installed, Venture Global was able to cut construction costs and shave months off its original startup timeline. One reason it was successful commercially, when many of its fellow developers have struggled to sign up customers, was the ultra-competitive long-term fixed prices it offered for its capacity; in some cases said to carry a liquefaction fee below $2/MMBtu. Platts assessed the Gulf Coast marker, the value for US FOB Gulf Coast cargoes loading 30 to 60 days forward, at $28.90/MMBtu on Feb. 28.

It was not exactly clear why it took 22 days for the Yiannis, which arrived Feb. 7, to be loaded and depart. US regulatory filings only said that initial production was being used to commission equipment and cool down the facility's storage tanks.

Venture Global has not said how many commissioning cargoes Calcasieu Pass planned to export before beginning commercial service under long-term agreements with offtakers that include Shell, Britain's BP, Italy's Edison, Portugal's Galp, Spain's Repsol and Poland's PGNiG. The trading arm of China's Sinopec has a short-term deal for volumes from Calcasieu Pass.

JERA, Japan 's largest power generation company and one of the largest LNG buyers in the world, was not among the foundational customers at Calcasieu Pass. However, JERA has signaled its desire for additional US volumes in recent months. In November 2021, independent fund manager Global Infrastructure Partners announced it had agreed to divest its 25.7% stake in Freeport LNG Development to a JERA unit for $2.5 billion. JERA said it expected the deal to provide equity access to 820,000 mt/year of supply capacity from the Freeport LNG project in Texas, which is south of Houston.

Last spring, Venture Global issued a supply tender tied to Calcasieu Pass for at least 12 cargoes from October 2021 to December 2022. The tender was issued at a time when Venture Global was expecting the terminal to start up by late 2021, a year ahead of the original schedule. First LNG production did not occur until Jan. 19, 2022, according to a Venture Global regulatory filing on Feb. 3.

According to multiple market sources, Vitol was heard to have won that tender. A second tender for fewer cargoes and starting later was said to have also been issued, an Atlantic-based trader said. Whether JERA may have acquired the cargo loaded on the Yiannis via a swap, a spot purchase, one of the tenders, or by some other means was not clear. Vitol had previously declined to comment. Both JERA and Venture Global did not offer details in the statement.

Based in Singapore, JERA Global Markets, the company's trading arm, handles trading and optimization of its parent's handling volumes of 35 million mt/year of LNG and 20 million mt/year of coal, with its fleet of 12 controlled tankers. JERAGM primarily supplies LNG to JERA, but also supplies LNG to other regional end-users and traders in addition to European gas markets with its access to the Dunkerque LNG import terminal in France.

Besides Calcasieu Pass, Venture Global has also proposed three additional LNG terminals in Louisiana, including the already permitted Plaquemines LNG project that would have an LNG production capacity of up to 20 million mt/year. Plaquemines is the most advanced of Venture Global's expansion projects, but the developer has yet to announce a formal final investment decision on any of the new facilities.