Venture Global Raises Plaquemines LNG Project Cost by $2 Billion

(Reuters) – Venture Global has announced a significant increase in the projected costs for its Plaquemines LNG plant located in Louisiana. The company now estimates that the project will cost approximately $2 billion more than previously forecasted, primarily due to inflation and other contributing factors. This adjustment brings the total expected cost of the Plaquemines LNG plant to a range of $23.3 billion to $23.8 billion, compared to the earlier estimate of $21 billion to $22 billion.

Current Financial Standing of Venture Global

As of December 31, 2022, Venture Global reported that it had already invested about $19.8 billion into the project. The company has not yet factored in the recent tariffs imposed by President Donald Trump’s administration, which are anticipated to increase the costs of equipment necessary for the establishment of such LNG plants. This financial update comes at a crucial time as the company navigates the complexities of the LNG market.

Regulatory Approvals and Capacity Expansion

In a positive development, U.S. federal regulators have granted Venture Global permission to enhance the export capacity of the Plaquemines plant. The capacity will increase from 24 million metric tons per annum (mtpa) to 27.2 mtpa, a move that reflects the growing demand for liquefied natural gas in the global market. This expansion is critical as Venture Global aims to solidify its position as a leading LNG producer.

Fourth-Quarter Financial Performance

In its latest financial report, Venture Global announced a fourth-quarter profit of $871 million, a significant turnaround from a loss of $50 million in the same quarter last year. This impressive profit was largely attributed to reduced expenses, which helped offset a 6.6% decline in revenue, bringing it down to $1.52 billion. The company’s shares saw a 1.9% increase, trading at $14.50 in premarket activity, reflecting investor confidence despite the rising project costs.

Future Plans and Investment Decisions

Looking ahead, Venture Global is preparing to initiate the final investment decision for a second LNG plant at its Calcasieu Pass facility in Louisiana. This new plant is expected to have a liquefaction capacity of 20 mtpa. As of the end of December, the company has already invested $4 billion towards this new facility. The expansion plans come at a time when Venture Global is facing contract disputes with major customers, including BP, Shell, and Edison, over the non-receipt of cargoes. These disputes have arisen due to lengthy testing and optimization processes that have delayed deliveries.

Conclusion

Venture Global’s decision to raise the cost forecast for its Plaquemines LNG project underscores the challenges faced by the LNG industry amid inflationary pressures and regulatory changes. As the company moves forward with its expansion plans and navigates contract disputes, it remains to be seen how these factors will impact its long-term growth and profitability. For more details, you can read the original article here.