Shell (SHEL) and BP Sue Venture Global LNG for Contractual Breach
Shell plc (SHEL) and BP plc BP filed separate arbitration cases against U.S. liquified natural gas (LNG) trader, Venture Global LNG (“Venture”), for failing to deliver contractual cargoes. Per a Reuters report, the dispute revolves around the fact that Venture was selling LNG to non-contract consumers as price surged.
According to the report, denial of the contractual LNG caused Shell and BP to miss out on billions of dollars in sales that (instead) went to Venture. Amid rising LNG prices brought on by Russia's curtailment in gas supplies to Europe, Venture had been selling LNG to European clients without contracts. These clients were ready to pay the inflated spot price.
Venture made no comments regarding these allegations. However, the company claimed to be in complete compliance with the terms of its long-term contracts last month. It also mentioned the necessity for extensive commissioning of its modular facilities. Venture cited the major ongoing repair work at its Calcasieu Pass LNG facility to be the reason behind its cargo delivery failure. It also stated the possibility of delayed contract deliveries from the first phase until early 2024.
Despite the concerns, Venture continues to commit to new LNG deals globally. The company entered into a 20-year sale and purchase deal with Securing Energy, a German energy firm, for Europe in late June. It is set to become the leading LNG supplier in Germany with 4.5 million tons of LNG transported annually under the deal.
Zacks Rank & Key Picks
Shell and BP are a group of U.S. and Europe-based energy multinationals with operations across the world. Currently, both companies carry a Zack Rank #3 (Hold).
A couple of better-ranked stocks for investors interested in the energy sector are Evolution Petroleum Corporation EPM and NGL Energy Partners LP NGL.
While Evolution Petroleum sports a Zacks Rank #1 (Strong Buy), NGL Energy Partners carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Evolution Petroleum is an independent energy company. It was formed to acquire and develop oil and gas fields and apply both conventional and specialized technology to accelerate production, particularly in low-permeability reservoirs. EPM has witnessed an upward earnings estimate revision for 2023 and 2024 in the past 60 days.
NGL Energy Partners, headquartered in Tulsa, OK, is a limited partnership operating a vertically-integrated propane business with three operating segments — retail propane, wholesale supply and marketing, and midstream. NGL has witnessed an upward earnings estimate revision for 2024 in the past 60 days.
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BP p.l.c. (BP) : Free Stock Analysis Report
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Shell PLC Unsponsored ADR (SHEL) : Free Stock Analysis Report
