TotalEnergies Rejects Venture Global LNG Amid Contract Disputes and Trust Concerns

The liquefied natural gas (LNG) sector is reeling from a high-stakes corporate clash after TotalEnergies CEO Patrick Pouyanne publicly rejected long-term supply deals with U.S.-based Venture Global LNG, citing a “lack of trust” in the company’s business practices. This decision highlights deepening tensions over Venture Global’s controversial strategy of prioritizing spot market sales over contracted deliveries, a move that has drawn legal challenges and damaged its credibility among major energy players.

TotalEnergies’ Stance: A Question of Trust

TotalEnergies’ refusal to engage in long-term contracts with Venture Global stems from concerns over the latter’s reliability. Pouyanne emphasized that Venture Global’s unusually low pricing raised red flags:

“The price of the LNG was so low. I said to my colleague, ‘How is it possible to pay $1 less than the rest of the market? What is the trick?’”.

The French energy giant also pointed to Venture Global’s history of delayed contractual deliveries at its Calcasieu Pass terminal in Louisiana, which has been operational since 2022 but remains in a prolonged “commissioning phase.” Despite generating up to $8.6 billion in operating profits from spot market sales, Venture Global has yet to fulfill long-term contracts with clients like Shell, BP, and Repsol. Pouyanne noted:

“I don’t want to deal with these guys because of what they are doing. I don’t want to be in the middle of a dispute with my friends, Shell and BP”.

Venture Global’s Defense: Disputing the Allegations

Venture Global has pushed back against TotalEnergies’ claims, asserting its commitment to honoring agreements:

“We have great respect for Total and are surprised to hear this. We continue to honor our contracts and execute the construction of our facilities safely and at a record pace”.

The company attributes delayed deliveries to unresolved technical issues at Calcasieu Pass, including faulty power equipment. It maintains that its contracts allow the sale of “commissioning cargoes” during pre-operational phases—a justification supported by the U.S. Federal Energy Regulatory Commission (FERC). However, critics argue this loophole has been exploited to maximize spot market profits at the expense of long-term buyers.

Broader Industry Implications

The fallout between TotalEnergies and Venture Global underscores systemic risks in the LNG market:

1. Contractual Reliability Under Scrutiny
Venture Global’s approach has sparked legal battles with at least six clients, including BP and Shell, who allege the company’s three-year commissioning period is unreasonably long. Arbitration cases seeking compensation for missed deliveries now exceed $1 billion. As one industry analyst noted:

“This is an unprecedented level of mistrust in the LNG business. Counterparties are going to court before deals even start”.

2. Regulatory Support vs. Market Realities
While FERC has backed Venture Global’s technical justifications, the controversy risks denting the reputation of U.S. LNG exporters. Buyers in Asia and Europe—key growth markets—are increasingly prioritizing suppliers with transparent operational timelines.

3. Financial and Market Consequences

• Stock Volatility: Venture Global’s shares plunged 11.2% following Pouyanne’s remarks, compounding a rocky IPO debut that saw its valuation cut from $110 billion to $58 billion.
• Project Delays: The Calcasieu Pass terminal’s commercial operation date has been postponed to Q1 2025, while its Plaquemines facility remains under construction despite processing 1.3 billion cubic feet of gas daily.

The Road Ahead for Venture Global

To regain trust, Venture Global must:

• Accelerate Contract Fulfillment: Transition Calcasieu Pass to full commercial operations by March 2025 as pledged.
• Clarify Pricing Strategies: Address concerns over aggressive discounts that Pouyanne called “too good to be true”.
• Balance Spot and Contract Sales: Reduce reliance on spot markets, which accounted for 90% of its revenue since 2022.

Industry Reactions and Takeaways

TotalEnergies’ decision reflects a broader shift toward caution in LNG contracting. Pouyanne emphasized:

“The U.S. has abundant gas supplies, but infrastructure and trust are critical. We’ll grow our U.S. position—but with partners we rely on”.

For buyers, the dispute highlights the need for:

• Stricter Contract Clauses: Limiting commissioning phases and spot market diversion.
• Diversified Suppliers: Reducing dependency on single exporters amid geopolitical and operational risks.

Conclusion
The TotalEnergies-Venture Global rift underscores the fragile balance between profit motives and contractual integrity in the LNG industry. As Venture Global races to resolve operational hurdles and legal disputes, its ability to rebuild trust will determine its role in a market increasingly wary of unconventional practices. For now, Pouyanne’s blunt assessment—”I don’t trust them”—serves as a cautionary tale for an industry navigating volatile demand and evolving partnerships.