Shell Cries Foul Over $3.5 Billion LNG Profit Grift?: “Wait, That’s OUR Move!”

Posted by John Donovan: 5 Sept 2024

In an ironic twist worthy of a soap opera, Shell—the oil giant whose entire business model is based on squeezing every last penny out of the Earth and its inhabitants—is now accusing upstart LNG producer Venture Global of “wrongfully earning” a cool $3.5 billion. Apparently, Venture Global has been playing the game a little too well, selling contracted gas on the high-priced spot market instead of delivering to Shell and other European customers. And Shell, the world’s favorite sin stock, is furious because how dare anyone else corner the market on profit-driven greed?

According to Shell’s claims, Venture Global’s heinous crime is refusing to deliver shipments under long-term contracts with European buyers—contracts meant to ensure stable supply during a time when Europe is in desperate need of energy, thanks to Russia’s war in Ukraine. Instead, Venture Global saw an opportunity to rake in cash by selling those shipments to the highest bidder on the spot market. I mean, isn’t that what every oil giant dreams of?

Shell, of course, went all out and commissioned a study (because when you’re a multibillion-dollar company, nothing says we’re mad like throwing more money at consultants). Their Compass Lexicon study determined Venture Global’s sneaky spot-market sales caused “extraordinary difficulties” for companies like Poland’s Orlen, which had to scramble to find replacement gas from five other U.S. suppliers, incurring an additional $1.5 billion in costs. And while Shell loves a good price surge, this time they were on the losing end, and that’s just unacceptable.

Orlen and a host of other European companies—Spain’s Repsol, Italy’s Edison, and Portugal’s Galp—are all in on the arbitration drama, demanding Venture Global stick to the contract and deliver the gas they’re owed. These companies were the so-called “foundation buyers” for Venture Global’s Calcasieu Pass facility in Louisiana, meaning they put up cash to build the plant in exchange for a promised supply of LNG. But instead of getting the fuel they paid for, these companies are left holding the bag while Venture Global laughs its way to the bank.

Venture Global, ever the disruptor, isn’t backing down. They’re claiming their plant hasn’t even been fully commissioned yet and that they don’t technically have to deliver any contracted gas until the Calcasieu Pass facility is officially completed. They’ve even gone so far as to declare force majeure, citing power supply equipment issues—because who doesn’t love a convenient technicality?

A Venture Global spokeswoman dismissed Shell’s study as nothing more than “paid propaganda” and said, with a straight face, that the company was actually doing the world a favor by bringing “incremental molecules into the market” and supposedly lowering prices.

Of course, Shell wasn’t going to let them get the last word. A Shell spokesman clapped back, saying, “Venture Global likes to portray that it is generously supplying LNG to European citizens most impacted by Russia’s invasion of Ukraine. What they’ve failed to disclose is how they’ve banked billions in additional profits on the backs of those customers — all while denying foundational buyers the cargoes they were contractually promised. That’s not generosity, it’s greed.”

Wait a minute—Shell accusing someone else of profiting off the backs of customers? Isn’t that like a serial bank robber complaining about someone else pulling off a heist?

So here we are, watching two oil and gas giants point fingers at each other in the world’s least sympathetic courtroom drama. Shell’s mad because Venture Global figured out how to make billions selling LNG at higher prices. But let’s be real—if the roles were reversed, Shell would be popping champagne and high-fiving in their boardroom. It’s hard to feel sorry for anyone in this story when the only real losers are the taxpayers and consumers footing the bill for their squabbles.

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