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A German state-owned company has requested from the U.S. Federal Energy Regulatory Commission approval for the construction of Venture Global’s CP2 LNG project.
The entity, called SEFE, or Securing Energy for Europe, comprises the assets previously owned by Gazprom’s German subsidiary. The company was nationalized last year and earlier this year inked a 20-year supply deal with Venture Global for 2.25 million tons of LNG annually.
To get the gas, however, SEFE first needs to ensure the CP2 LNG facility gets built.
"SEFE's long-term LNG purchased from CP2 LNG will now be vital to Germany's energy security in the new environment where gas pipeline supplies from Russia have stopped," the company said in a letter it sent to FERC this week, as quoted by Reuters.
Besides approval from regulators, Venture Global would need large enough commitments from buyers to invest in the new project. This is happening at a complicated time for the U.S. LNG producer.
Five European energy companies including BP, Shell, and Repsol are going after it for contract violations. According to them, Venture sold LNG meant to be supplied to these companies on the spot market to make bigger profits while declaring a force majeure on deliveries from its existing LNG plant, Calcasieu Pass.
Since the start of operation of the facility, Venture Global has sold more than 200 LNG cargos but has delivered none to its long-term buyers, Reuters reported earlier this week. This prompted BP to approach FERC alleging the regulator had failed to enforce rules regarding transparency. Venture Global has refused to disclose documentation pertaining to the alleged technical difficulties that necessitated the declaration of a force majeure at Calcasieu Pass.
Meanwhile, Venture Global is already working on the construction of the CP2 LNG facility and has commitments for half of the plant’s annual capacity, which stands at 20 million tons. It expects to secure commitments for the remainder by the end of this year.
By Irina Slav for Oilprice.com
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.