Shares of Venture Global experienced an approximate 8% increase on Thursday, propelled by a favorable decision in arbitration proceedings initiated by Spain’s energy company Repsol. The dispute concerned Venture Global's inability at first to supply liquefied natural gas (LNG) from its Calcasieu Pass facility, as stipulated in a 20-year contractual agreement.
The arbitration was conducted under the auspices of the International Chamber of Commerce, headquartered in Paris. The tribunal disallowed all of Repsol's claims, affirming that Venture Global had conducted itself as a "reasonable and prudent operator," fully compliant with the contract terms.
As the second-largest exporter of LNG in the United States, Venture Global's track record in 2023 shows mixed but largely positive arbitration outcomes. The company has secured victories in two out of three rulings released thus far this year, including a favorable decision in a similar case against Shell in August. Conversely, an arbitration decision went against Venture Global in a proceeding involving BP in October. Other European energy firms such as Edison from Italy and Portugal's Galp have also lodged claims, with those cases still under review.
The litigations revolve around allegations that Venture Global maximized profits by selling LNG cargoes on the spot market during periods of increased prices following geopolitical tensions triggered by Russia’s invasion of Ukraine, rather than fulfilling long-term contractual commitments. Venture Global, however, maintains it has fully complied with all long-term contract requirements and expresses confidence about prevailing in the ongoing disputes.
UBS analyst Manav Gupta communicated expectations that additional arbitration verdicts involving Edison, Galp, and Orlen are anticipated to be disclosed in 2026 and 2027.
The value of Venture Global shares has notably diminished since the company's IPO in January 2023, dropping from an initial market cap of approximately $58 billion to around $22.16 billion as of the close on Wednesday. UBS analysts remark that this decrease largely stems from the uncertainty and overhang caused by multiple arbitration proceedings. The recent triumph against Repsol is considered a significant positive development, offering investor reassurance.