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Venture Global signs LNG contract with BP, its 2nd binding deal in May

Venture Global LNG signed a 20-year sales and purchase agreement with BP PLC for volumes from its proposed Calcasieu Pass LNG export terminal in Louisiana, which is now 60% contracted.

Under the agreement, BP would buy 2 million tonnes per annum on a free-on-board basis for a 20-year term once the export facility begins commercial service, which Venture Global expects in 2022. With commitments for 6 mtpa of LNG from Calcasieu Pass, Venture Global is the only developer of a "second wave" LNG export terminal with binding agreements.

Venture Global is developing two LNG export terminals, both of which would use modular trains that cool natural gas to a liquid. The $4.5 billion Calcasieu Pass project would consist of nine blocks, each containing two 0.56-mtpa liquefaction trains, for a total capacity of roughly 10 mtpa. The Plaquemines LNG export terminal, which does not have any binding contracts, is estimated to cost $8.5 billion and would be able to produce 20 mtpa. Both are awaiting an environmental review from the Federal Energy Regulatory Commission.

The company on May 2 announced a 20-year sales and purchase agreement with Portuguese energy company Galp Energia SGPS SA for 1 mtpa. In March, Venture Global said Royal Dutch Shell PLC's Shell NA LNG agreed to double its original deal for LNG from Calcasieu Pass to 2 mtpa. And in September 2017, the developer entered into an agreement with the Italian energy company Edison S.p.A..

Developers of U.S. LNG export projects beyond those in operation or under construction have struggled to sign long-term contracts that allow them to receive financing. Much of the conversation over the past two years has revolved around an LNG supply glut spurred by a wave of new projects in the U.S. and Australia. But market watchers and industry experts are starting to sound the alarm over a shortage they see emerging in the early to mid-2020s if additional liquefaction capacity is not sanctioned.

U.S. LNG export pioneer Cheniere Energy Inc. has been the only other U.S. developer to sign binding contracts for export capacity that does not yet have a final investment decision. Cheniere executives on May 4 said they expect to reach a final investment decision on a third 4.5-mtpa train at the company's Corpus Christi terminal in "the coming weeks."