Energy export firm Venture Global LNG has announced plans to expand its sales operations by purchasing a fleet of vessels to target markets directly.
The firm has acquired nine LNG carriers to transport cargoes, with plans to employ between 50 and 100 new staff to manage this new fleet.
“We’re long LNG, and we mostly right now view this as just selling LNG rather than traditional traders, where they buy LNG from some producers and sell it to others,” Mike Sabel, CEO of Venture global, said. “Over time, we’ll look for opportunities where we will trade cargoes between basins, and that’ll develop naturally.”
The move makes the firm the first American LNG producer to purchase its own fleet.
Contract dispute
The fleet of new LNG carriers are all South Korean-built and will allow Venture to cut out middlemen in some of its key trades as tensions grow over allocation of fuel. Some of the firm’s largest existing customers, have complained that Venture has missed obligations to contracted buyers while simultaneously selling at higher profit to local spot markets.
In January Shell and BP called on US energy regulators to start legal proceedings to disclose privileged documents revealing why Venture Global has delayed full commercial start-up of its Calcasieu Pass export plant in Louisiana.
Calcasieu Pass first started producing almost two years ago and has sold more than 250 shipments into local spot markets but it has yet to send a single cargo under long-term contracts.
Transition models
As a result, this latest shift towards direct sales and ownership of LNG carriers will be closely watched by industry. By taking control of its transportation logistics, the company aims to achieve greater flexibility and agility but faces numerous challenges as well.
As LNG develops into a key transport fuel for the energy transition, pressure is mounting on traditional business models, with competition to enhance supply chain efficiency, reduce costs, and better meet the demands of a global clientele growing.
The first two of Venture’s new vessels are scheduled for delivery later this year and will make a sizeable dent in capex spending. While the firm declined to comment on costs, similar vessels are currently trading at around US$280 million each. Management will be hoping that the opening of its second plant, at Plaquemines, in Louisiana, will drive new revenues.
Venture Global is on track to become one of the biggest US LNG exporters this year.
