The ongoing arbitration saga between major energy buyers and U.S. liquefied natural gas (LNG) exporter Venture Global has taken a notable turn, with recent divergent decisions highlighting the complexity of contractual interpretation and arbitral discretion in the LNG sector. BP has emerged victorious in its arbitration against Venture Global, just two months after Shell lost its similar case against the same LNG exporter.

Background

At the heart of both disputes is Venture Global’s Calcasieu Pass LNG export terminal in Louisiana. BP, Shell and Repsol, along with other energy companies were foundation buyers in Calcasieu. The companies provided the money to build the facility in exchange for a commitment to supply certain volumes over a long-term period. Those long-term commitments were recorded in sales and purchase agreements (SPAs) between the energy companies and Venture Global. The SPAs were meant to guarantee LNG deliveries starting in late 2022. However, Venture Global delayed declaring the commercial operations date, citing equipment issues and a malfunctioning power island. The delay allowed Venture Global to profit, by selling LNG cargoes on the spot market at higher prices during the energy crisis triggered by Russia’s invasion of Ukraine, bypassing its long-term commitments.

The energy companies (BP, Shell, Repsol, Galp, Edison, Orlen, and Unipec) launched separate arbitration proceedings against Venture Global, alleging that the exporter diverted LNG cargoes during the commissioning phase of the export terminal to capitalise on elevated spot market prices. Venture Global denies the claims saying that it delayed moving the commercial operations because of a faulty electric system that did not allow the plant to operate optimally. Their combined claims reportedly exceeds USD 7 billion.

The Decisions

In August 2025, the International Chamber of Commerce (ICC) ruled in favour of Venture Global in the claim brought by Shell. The Tribunal found that Venture Global had not breached its obligations under the SPA. The Tribunal found that commissioning cargoes were not subject to the long-term supply obligations under its contract and therefore Venture Global’s conduct fell within the permissible bounds of its commissioning discretion.

By contrast two months later, the ICC issued a partial award in favour of BP. The Tribunal in BP found that Venture Global had breached its obligation to declare the commercial operations in a timely manner and failed to act as a “reasonable and prudent operator” under the terms of its SPA.

BP is now seeking over USD 1 billion in damages, with a separate quantum hearing scheduled for 2026 to determine the final award. The tribunal had already indicated that damages may not be capped by the original contract terms, potentially exposing Venture Global to significant financial liability.

The reasons for the divergence in outcomes remain unclear. Both arbitrations centred on the same core facts: delayed declarations of commercial operations, profitable spot market sales by Venture Global, and alleged breaches of long-term LNG contracts. Yet, the tribunals reached opposite conclusions.

This divergence may stem from differences in (a) how each tribunal interpreted the contractual framework, or (b) the strategic choices made by the parties during the proceedings. Notably, we have excluded differences in SPA wording as a factor, given Venture Global’s CEO stated on a post-award investor earnings call following the Shell decision:

“We remain confident of similar outcomes in the balance because it’s the same contracts and facts around construction, and the facts around the completion of the facility are all the same.” (emphasis added)

Nonetheless, the inconsistency in outcomes underscores the critical importance of precise drafting in LNG contracts and highlights the inherent unpredictability of arbitration, particularly in the absence of a binding precedent system.

This unpredictability may have contributed to Venture Global and Unipec (Sinopec’s trading arm) opting to settle their dispute, as recently reported. It remains to be seen whether Venture Global, Repsol, Galp, Edison, and Orlen will similarly seek to mitigate risk through settlement.

As the remaining arbitrations progress, this will be a compelling series of cases to monitor closely.

Legal Issues arising from LNG Contracts

Disputes of this kind generally arise from a disparity (often a very large one) between the contractually agreed prices and market prices. This creates incentives for one party to seek to find ways to maximise the economic benefit they can achieve from the relationship. In our experience there are two issues which require careful consideration when acting for parties considering what might be considered “aggressive” commercial strategies in relation to long term supply contract:

Repudiatory Breach: Has the Seller Fundamentally Undermined the Contract?

The First is whether, if what is done constitutes a breach of contract, will it result in the loss of the entire contract? This is important because disputes of this nature generally arise as part of long-term supply contracts. It may be in the interests of the party seeking to maximise returns to maintain the contract and conversely, it may be in the interests of the other party to avoid the contract if a fundamental breach can be established. Decisions of this nature are therefore often high-stakes.

A repudiatory breach occurs when a party does not perform an obligation that goes to the root of the contract, such as a breach of a condition of the contract or a serious breach of intermediate/ innominate term. If a repudiatory breach is proved, it entitles the counterparty to accept the repudiation and bring the contract to an end. Misuse or misdirection of LNG in breach of a contract in general is unlikely in and of itself to constitute a repudiatory breach, but a deliberate strategy to do so may qualify. Ultimately, the question will turn on a detailed analysis of the agreement in question and the nature of the breach. Given the potential consequences, thorough legal analysis should be undertaken prior to any step of this nature.

What is the proper measure of damages for a breach of this nature?

Under English law, damages aim to place the non-breaching party in the position it would have been had the contract been properly performed. In LNG disputes, this typically involves:

• The difference between the contract price and the price of replacement cargoes on the spot market.
• Consequential losses such as lost profits, missed trading opportunities, and reputational harm though these are often excluded by limitation clauses.
• Foreseeability and mitigation, as damages must be reasonably foreseeable and mitigated where possible.

Limitation of liability clauses play a pivotal role. Many SPAs exclude liability for consequential loss or cap damages. These clauses are generally enforceable between commercial parties. In this regard, it is reported that Venture Global mentioned that damages claimed by customers exceed the cap set in the original LNG sales agreement.

Conclusion

For LNG buyers and energy companies not yet in dispute, these developments offer a timely reminder of the value of proactive legal review. In light of the divergent arbitral outcomes, companies may wish to engage counsel to scrutinise their LNG SPAs—particularly the commissioning clauses, the seller’s rights and obligations regarding spot market sales, and any right of first refusal provisions granted to anchor buyers.

A forward-looking legal strategy can help mitigate exposure and ensure that contract language aligns with commercial expectations and operational realities, especially in volatile market conditions.

These cases underscore the importance of understanding the legal consequences of breach. Whether the breach is repudiatory will depend on its seriousness and any available affirmation arguments. The measure of damages, soon to be tested in the case of BP, will be shaped by the contract’s limitation clauses and the surrounding factual context.

Please contact Anna Maxwell, Tim Elliss, Jonas Habert or Victoria Rea if you have any questions.