Shell Sues Venture Global in US Court for LNG Supply Breach, Parallels Emerge with Nigeria LNG’s UK High Court Case

Shell has taken legal action against Venture Global LNG in a U.S. court, accusing the company of restricting access to LNG supplies for Shell and other customers while exporting over $18 billion in LNG.

Shell has requested the Federal Energy Regulatory Commission to compel Venture Global LNG to disclose plant commissioning data to clarify the cause of the delayed commercial operations.

European companies claim that they have not received their gas cargoes under long-term contracts with Venture Global LNG, leading to lost profits.

In a parallel development, Nigeria LNG is facing a UK High Court case for breaching an LNG supply contract by failing to deliver 19 cargoes under a contract executed in January 2020.

The cargoes, due for delivery between October 2020 and October 2021, have not been delivered. An arbitration tribunal confirmed Nigeria LNG’s breach in a final award dated January 30, 2023.

The disputes involving Venture Global LNG and Nigeria LNG are attributed to the unexpected surge in the LNG market following the Russian-Ukraine conflict, post-Covid market recovery, and increased demand in Asia and European markets.

This situation has led to numerous defaults on agreements, with LNG suppliers prioritizing higher margins at the risk of lengthy litigations.

Both cases highlight the challenges faced by LNG suppliers and customers in a rapidly changing market environment.

As the disputes progress, it remains to be seen how the courts will address the issues of contract breaches and the implications for the broader LNG market.