Bloomberg: Orlen launches arbitration against Venture Global over LNG

Poland’s largest oil and gas company, Orlen, has launched arbitration proceedings against US LNG exporter Venture Global, which it says is failing to meet its long-term supply contract. Bloomberg reported the news today, citing sources familiar with Orlen’s actions. Among other assets, Orlen owns Czech company Unipetrol.

By launching arbitration proceedings against Venture Global, Orlen has joined other European oil companies, including Shell and BP. The companies accuse Venture Global of selling LNG on the spot market instead of fulfilling its long-term supply contracts. The US company says the failure to meet the contracts is due to operational problems and that deliveries under the long-term contracts should begin by the end of next year.

According to the sources, Orlen is seeking the immediate start of LNG deliveries under the contract. It nevertheless expects the arbitration proceedings to take one to two years. Orlen has not ruled out seeking compensation from Venture Global, depending on when deliveries begin, Bloomberg reports.

Poland has signed a number of LNG supply contracts in the United States and other countries as part of its efforts to reduce its dependence on gas imports from Russia. According to the sources, Venture Global’s failure to meet the contract has no impact on the country’s energy security and its effects are purely financial. Orlen has to make up for the missing deliveries by buying gas on the spot market at significantly higher prices.

pmh ml