Venture Global Will Be First U.S. LNG Producer to Own Fleet of LNG Carriers
Venture Global, which is developing LNG facilities in Louisiana on the U.S. Gulf Coast is also becoming the first U.S. producer to buy and operate its own fleet of LNG carriers. The company revealed on Sunday that it has purchased nine vessels, including three of the largest carriers, with delivery of the vessels due to start later this year timed to the expected commercial start of the Calcasieu Pass facility.
Analysts called the entry into ship operations, versus competitors that sell to traders or charter vessels, a bold move that will permit the company to directly sell into the spot market and deliver its cargos. Removing intermediaries from the transaction is designed to improve profitability for Venture Global, which highlights that it is currently developing over 70 MTPA of production capacity. The company started production at Calcasieu Pass in January 2022 and expects to start Plaquemines LNG before the end of this year. They are also working on expansion projects at both sites as well as other potential deals.
CEO Mike Sabel highlights the fleet as further advancing the integration of the business across the entire LNG supply chain. Venture Global’s strategy is to span from natural gas transmission to liquefaction and export, transport on its fleet of LNG carriers, and regasification capacity in Europe. The company also previously announced a long-term terminal use agreement for regasification capacity at National Grid’s UK facility Isle of Grain LNG, which is Europe's largest LNG import terminal. The company previously said about three-quarters of its production is being sold to Europe.
The company however has faced challenges and disputes with customers due to delays in completing the commissioning of its first facility Calcasieu Pass. While they have been producing for two years, technical challenges and equipment malfunctions they contend have delayed the start of commercial operations. The company recently applied to regulators for delays till late 2024 while customers including Shell, BP, Repsol, and others filed arbitration claims. The customers cite delays in meeting their contracts while the company has sold more than 250 cargoes into the spot market.
Details of the ship construction and purchase agreements were not revealed but it is believed to be with Hanwha Ocean, formerly Daewoo Shipbuilding and Marine Engineering, one of the leading builders of LNG vessels. Venture Global was previously linked to construction orders with the company confirming yesterday that it will have a fleet will consist of six 174,000 m3 and three with a cargo capacity of 200,000 m3 vessels. The first cargo from Calcasieu departed on a JERA vessel in 2022.
They are highlighting that the vessels are being built with the latest 2-stroke engines and modern hull forms as well as shaft generator and air lubrication systems to increase fuel efficiency and lower emissions. They said the selected engines supported by the shaft generator technology will reduce methane slip compared to previous designs and engine designs.
The move to further expand the company’s competitive position comes at a lucrative moment after the Biden administration announced a review of the permitting process and delay for future projects. There is uncertainty in the market over the length of the delay which creates an advantage for the producers that already have capacity and permitted projects.