Kosmos Energy Ltd. KOS and BP plc BP were involved in a legal dispute concerning a liquefied natural gas (LNG) project. The case has been ruled in favor of BP. The ruling by a Paris-based arbitrator prevents Kosmos Energy from selling the LNG produced from its Greater Tortue Ahmeyim (GTA) project to any third party. The Greater Tortue Ahmeyim (GTA) project is located offshore Senegal and Mauritania,with BP as its operator.
Expansion of BP's LNG Portfolio
LNG has a significant role in BP’s energy transition plans and overall strategy. The company has significantly expanded its LNG portfolio worldwide. The British energy giant believes that Sub-Saharan Africa has the potential to become a significant exporter of LNG in the future. Meanwhile, countries such as Nigeria, Angola, Cameroon and Equatorial Guinea have already entered the market and are shipping LNG extensively.
In the previous year, Kosmos Energy and BP’s subsidiary, BP Gas Marketing, had a dispute over the planned sale of LNG from Phase 1 of the GTA project. Due to this, the two companies sought arbitration from the International Chamber of Commerce, which again ruled against Kosmos Energy. The final binding award prevents KOS from engaging in third-party sales of the LNG cargoes within the term of the LNG sales agreement. The agreement includes an option to end it in 2033.
The final arbitration ruling does not alter the terms of the LNG sales agreement. Further, KOS mentioned that the decision does not significantly affect its expectations for the long-term or financial standing in the future.
Details of the GTA Project
BP holds a 56% interest in the GTA project, and its subsidiary BP Gas Marketing is the exclusive buyer of LNG under the sales agreement. Per the agreement, BP Gas Marketing can buy the entire 2.5 million metric tons of LNG produced from the project annually over 20 years. Kosmos Energy holds a 26.8% interest in the project. Almost 90% of the GTA project was completed in 2023, as per BP’s statement. However, the project came online in the first quarter of 2024.
Arbitration Between Shell and Venture Global LNG
Previously, BP and Shell plc SHEL were involved in a legal dispute with Venture Global LNG. LNG producer Venture Global had been sued by Shell, along with many other energy players, for defaulting on its obligation to deliver LNG cargoes under long-term agreements.
Venture Global LNG has allegedly exported significant volumes of natural gas worth more than $18 billion, as per a regulatory filing in the United States. Venture Global LNG is accused of exploiting a loophole in its long-term contracts that allows it to trade gas on the spot market until its Calcasieu Pass facility is fully operational. Once the facility begins operations, Venture Global must fulfill the terms of its agreements with major energy players like BP and Shell.
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