Venture Global Raises Plaquemines LNG Project Cost by $2 Billion

(Reuters) – Venture Global has announced a significant increase in the projected cost of its Plaquemines LNG plant in Louisiana, now estimating the total expenses to be around $2 billion higher than previously forecasted. This adjustment brings the anticipated cost range to between $23.3 billion and $23.8 billion, compared to the earlier estimate of $21 billion to $22 billion. As of December 31, the company had already invested approximately $19.8 billion into the project.

Factors Influencing Cost Increase

The increase in costs is attributed to inflation and other economic factors that have impacted the energy sector. Additionally, the company has not yet accounted for the recent tariffs imposed by the Trump administration, which are expected to further raise the costs of equipment necessary for establishing LNG plants. These tariffs could have a significant impact on the overall financial outlook for the Plaquemines project.

Regulatory Approvals and Capacity Expansion

In a positive development for Venture Global, U.S. federal regulators have granted permission to increase the export capacity of the Plaquemines plant from 24 million metric tons per annum (mtpa) to 27.2 mtpa. This expansion is crucial as the demand for liquefied natural gas continues to rise globally. The company is also preparing to make a final investment decision for a second LNG plant at its Calcasieu Pass facility, which will have a liquefaction capacity of 20 mtpa. As of the end of December, Venture Global has already invested $4 billion towards this new facility.

Financial Performance Amid Challenges

Despite the challenges posed by rising costs and ongoing contract disputes with major customers such as BP, Shell, and Edison, Venture Global reported a fourth-quarter profit of $871 million. This marks a significant turnaround from a loss of $50 million in the same quarter last year. The company’s ability to lower expenses played a crucial role in this positive financial outcome, even as revenue fell by 6.6% to $1.52 billion.

Market Reaction and Future Prospects

Following the announcement of the cost increase and the positive financial results, shares of Venture Global saw a 1.9% rise in premarket trading, reaching $14.50. This uptick reflects investor confidence in the company’s strategic direction and its potential to navigate the complexities of the LNG market.

As Venture Global moves forward with its ambitious plans, the company faces the dual challenge of managing rising costs while ensuring the successful completion of its projects. The ongoing contract disputes with key customers over non-receipt of cargoes due to lengthy testing and optimization processes could also impact future revenues. However, with the recent regulatory approvals and a strong financial performance, Venture Global is well-positioned to capitalize on the growing demand for LNG.

For more details, visit the original article.