Shell Doubles LNG Purchase Agreement with Venture Global
Royal Dutch Shell has agreed to double its liquefied natural gas purchase agreement with Venture Global, taking the US LNG group one step closer to a final investment decision for its project in Louisiana.
The Anglo-Dutch energy group’s latest deal takes the total committed purchases for Venture Global’s Calcasieu Pass 10m tonne project to 3m tonnes. Venture Global had initially signed a 1m tonne binding 20-year agreement with Shell in 2016, followed by another 1m tonne deal with Italy’s Edison last year.
The announcement comes as US shale and the rising supplies of LNG are changing the nature of the market in the supercooled fuel. LNG contracts from the US have not tied buyers to specific destinations, allowing for trading opportunities, which were virtually non-existent under rigid agreements between producers and end users.
Mike Sabel and Bob Pender, co-heads of Venture Global said that the signing of Shell was a “breakout event” as they look to start construction of the LNG facility at the end of this year. The group are hoping to start production by the end of 2021 with commercial operations commencing the following year. The company is also working on a 20m tonne project at Plaquemines Parish in Louisiana.