The Plaquemines LNG project led by Venture Global is running over budget and could end up with a total price tag of between $21 billion and $22 billion, Reuters has reported, citing Venture Global’s IPO documents.
Plaquemines LNG will be the company’s second production facility after Calcasieu Pass, with a capacity to produce 20 million tons of the superchilled fuel annually. Production should begin in the coming weeks, despite the setbacks.
The cost overrun for Plaquemines stands at $2.35 billion at the moment but the number could rise further, according to the Venture Global documents, due to rising labor costs, higher steel prices, and more expensive equipment.
Venture Global has been embroiled in a dispute with half a dozen European energy majors, which signed up for long-term deliveries from the Calcasieu Pass facility, only to see the LNG sold on the spot market for higher prices and their deliveries delayed.
The way Venture Global did this was by using a loophole that stipulated it could trade its product on the spot market before the production facility was completed. In view of keeping the spot market business going, Venture Global has been delaying the official completion of the Calcasieu Pass for as long as it has been able to. Now that the investors are suing, it may be running out of postponements.
The Calcasieu Pass facility has an annual capacity of 10 million tons of liquefied natural gas and it started production in 2022, just when Europe was feeling a gas squeeze amid the Russian-Ukrainian war. Venture Global, however, sold its LNG on the spot market, triggering legal action from its foundational investors, which include Shell, BP, Repsol, Eni, and Edison.
It appears the company has identical plans for the Plaquemines facility, with Reuters citing its chief executive as saying deliveries under long-term contracts will begin no sooner than 2026.
By Irina Slav for Oilprice.com
