Venture Global strikes LNG supply deal with Exxon's Asia-Pacific unit

Reuters

Published May 10, 2022 06:40AM ET

Updated May 10, 2022 04:11PM ET

By Marcy de Luna and Rithika Krishna

HOUSTON (Reuters) -Venture Global LNG said on Tuesday it would supply two million tonnes of liquefied natural gas (LNG) a year to Exxon Mobil Corp (NYSE:XOM), a sign of its rapid rise in the ranks of LNG suppliers and the strong global demand for U.S. LNG.

Venture Global LNG, which plans to build four LNG plants using a modular design that streamlines construction and cuts production costs, has emerged as a powerful force in LNG. The company this year started exports from its first Calcasieu Pass, Louisiana, plant and the Exxon deal will help advance two other proposed facilities.

The United States this year is expected to surpass Australia and Qatar as the world's largest LNG exporter, delivering more than 12.2 billion cubic feet per day. Global demand for U.S. LNG has surged since February with Russia's invasion of Ukraine, which tightened an already under-supplied market.

Exxon's Asia Pacific unit agreed to purchase one million tonnes of LNG each year from Venture Global's Plaquemines LNG facility, which is now under construction, and its planned Calcasieu Pass 2 facility.

Exxon and Venture Global spokespeople did not reply to requests for comment on the value of the agreement or when shipments would begin.

"It's a statement that Exxon believes there's more demand, and they're prepared to spend money and take some risks to acquire more volume," said Jason Feer, global head of business intelligence at Poten & Partners, an energy and shipping consultancy.

The deal will help advance Exxon's LNG sales growth in Asia and in China, already the world's largest importer of LNG. Exxon is a 30% partner in the Golden Pass LNG facility now under construction near Sabine Pass, Texas. That $10 billion facility is expected to start processing fuel in 2024.