By Curtis Williams

Houston (Reuters) –

Venture Global LNG is set to commence liquefied natural gas (LNG) production at its Plaquemines export plant in Louisiana as early as this week, according to LSEG data released Thursday.

This marks the first new U.S. LNG plant to begin production in two years, outpacing Cheniere Energy's (NYSE:LNG) Corpus Christi midscale expansion project. Additionally, this initiates a commissioning phase of up to two years, during which Venture Global retains all revenue from the shipments.

The export plant is designed to produce 20 million metric tons per annum (MTPA) and was scheduled to draw over 100 million cubic feet (mmcfd) of natural gas for the first time on Thursday, per LSEG data.

U.S. regulators authorized Venture Global to commission the sixth of 18 blocks at Plaquemines, with each block consisting of two trains utilizing 150 mmcfd of gas, as documented.

Long-term contract customers of the Louisiana facility may have to wait up to two years for their cargoes due to the commissioning timeline, which extends to 2026 for the first phase and 2027 for the second.

Delays similar to those at Venture Global's Calcasieu Pass plant have led to contract disputes, resulting in arbitration cases involving BP (NYSE:BP), Shell (LON:SHEL), Edison, Repsol (OTC:REPYY), and Orlen. If Venture Global loses these cases, it could incur billions in costs, as indicated in a July senior notes offer.

Having existing sales contracts facilitated Venture Global's financing efforts for the new facility. Nonetheless, the company has seen increased profits by selling on the spot market, arguing that during commissioning, the plant does not operate optimally, thus they are not obligated to deliver contracted cargoes.

"A key element of our business strategy is to generate proceeds from the sale of LNG…prior to the relevant project achieving COD (commercial operation date)," Venture Global stated in its offering. COD indicates the completion of commissioning.

Shell expressed that its dealings with Venture Global have led them to consider the LNG developer "an unreliable supplier."

Companies such as Exxon Mobil (NYSE:XOM), EDF (EPA:EDF), Petronas, and Chevron (NYSE:CVX) have announced purchase agreements for Plaquemines but opted not to comment.

Venture Global responded to Shell's critique, calling it "the height of hypocrisy" and highlighting the delayed commencement of Shell's Canada LNG plant.

"Our business model and plan for simultaneous operations … has been disclosed to our customers, regulators and financial stakeholders," a spokesperson for Venture Global stated.

OVER BUDGET

Venture Global's first plant has been in commissioning mode since March 2022. As of December 2023, it had sold 360 cargoes on the spot market, generating operating profits of $8.4 billion, according to an investor document.

The Plaquemines facility has exceeded its budget by more than $2.3 billion as the company aims to remain on schedule. Venture Global intends to operate the plant at 15% above its nameplate capacity, as stated in bond documents.

Since June 2023, Venture Global has not secured any new customer contracts, coinciding with reports of arbitration involving Italian electric company Edison.