Venture Global Is a Major LNG Producer With Risks

Venture Global does not lack ambition. Its development plan envisions a vertically integrated liquefied natural gas producer that controls substantial global market share. Core to this plan is maximizing the sale of LNG volumes going toward the spot market, rather than selling under long-term agreements. We largely agree with this strategy, as Venture has invested heavily in building out facilities at the top of the cycle. To make adequate returns, it must maximize sales on short-term agreements that produce $1-$3/million British thermal units more at midcycle than under long-term agreements. This structure also produces extremely volatile performance.