Orlen Files Arbitration Case Against Venture Global in LNG Spat

(Bloomberg) -- Orlen SA lodged an arbitration case against Venture Global LNG Inc., alleging that the US liquefied natural gas exporter wasn’t honoring its long-term contract with Poland’s largest oil and gas company, according to people familiar with the move.

The Polish state-controlled firm followed other European oil companies, including Shell Plc and BP Plc, in filing a complaint against Venture Global saying that the US company failed to send LNG shipments under long-term contracts, while selling spot cargoes from its Calcasieu Pass terminal. 

Venture Global has said it hasn’t yet sent out the shipments because of operational issues with the startup phase of the investment. The deliveries under the long-term contracts should begin by the end of 2024, Chief Executive Officer Mike Sabel said this month.

Orlen wants Venture Global to start supplying LNG under the contract immediately, said the people, who asked not to be identified because they’re not permitted to publicly discuss such information. The Polish company expects the arbitration case to take one to two years, the people added.

Poland has signed numerous LNG contracts with US and other global suppliers in past years as it has been preparing to sever ties with Russian exports. The country’s LNG terminal on the Baltic Sea, as well as new pipeline link to Norway helped it secure deliveries after Russia cut gas flows last year.

The lack of shipments from Calcasieu Pass had no bearing on the country’s energy security, the people said, adding that the impact has been purely financial. Orlen had to replace the missing volumes from the contract on the spot market, which cost it about twice as much compared with the price in the long-term contract with Venture Global. 

The Polish company, which also has another deal with Venture Global, which should begin in 2026, sees value of lost profits at several billion zloty. It doesn’t rule out seeking damages from Venture Global depending on when the deliveries under the contract start.

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