Venture Global, Vitol sign LNG offtake agreement

US LNG producer Venture Global and commodity trader Vitol announced on March 23 that they had signed a new binding LNG offtake agreement. Under the agreement, Vitol will buy roughly 1.5mn tonnes per year (tpy) of LNG from Venture Global’s portfolio over a period of five years, starting in 2026.

This marks the latest in a series of offtake agreements announced by Venture Global. Indeed, earlier this month, the company struck a five-year deal with another commodity trader, Trafigura, for 500,000 tpy. At the time, Venture Global touted the medium-term agreement as offering “greater flexibility” to customers and providing “greater diversification” for its LNG portfolio.

This week, Venture Global’s CEO, Mike Sabel, also pointed to “flexibility” as one of the advantages his company’s volumes can provide.

“Thanks to our innovative model, we have the ability to provide our customers with short, medium and long-term LNG supply, and this agreement is another important step in diversifying the tenor of our LNG portfolio,” Sabel said.

This comes as the LNG market is seeing significant disruption from the war in Iran and military strikes against Qatar’s LNG facilities amid the conflict. Being able to sell cargoes on the spot market under these circumstances will likely be advantageous, and it is not surprising that Vitol has been seeking an offtake deal – though negotiations may well have started before the current crisis in the Middle East. Other deals – with both commodity traders and industrial consumers – could follow. Indeed, Venture Global has been announcing new offtake agreements at a steady pace for some time now, and the situation in the Middle East could help to accelerate this.

Venture Global said in mid-March that its contracted volumes had reached above 49mn tpy. The Vitol deal thus brings the amount of LNG Venture Global has under contract to over 50mn tpy.

The deal with Vitol also comes shortly after Venture Global took a final investment decision (FID) on Phase 2 of CP2 LNG. At the same time, the company announced that it had closed an $8.6bn project financing for the second phase of CP2 LNG, which brings the total financing for Phase 2 to $20.7bn.