Shell's legal fight against Venture Global focuses on communication with engineer, court transcript shows

Reuters
01/28
Shell's legal fight against Venture Global focuses on communication with engineer, court transcript shows

Shell asks court to review communications between Venture Global and Lummus Consultants

Lummus engineer was relevant witness in Shell's arbitration over LNG, Shell says

By Francesca Landini and Stephanie Kelly

January 27 (Reuters) - Shell's SHEL.L challenge to its arbitration defeat to liquefied natural gas producer Venture Global VG.N centres on potential communications between the U.S. firm and independent engineer Lummus Consultants, a draft court hearing transcript seen by Reuters shows.

The transcript from a January 12 New York Supreme Court hearing includes more details about the prolonged battle between Venture Global and oil major Shell, and the naming of Lummus as a third-party witness during arbitration proceedings.

Shell lost an arbitration case last year concerning cargoes from Venture Global's Calcasieu Pass LNG plant. The oil company challenged the result, alleging that a third party had testified in arbitration that Venture Global had abruptly decided to delay the commercial start of its Calcasieu Pass plant and had cited communication with the U.S. company over its LNG plant.

Shell also said it asked arbitrators to study communication between Venture Global and the third party - an independent engineer - about the progress of Calcasieu Pass but Venture Global had avoided disclosure by giving misleading statements. Venture Global denied its counsel made misleading statements.

In arguments during the January 12 hearing, Shell asked the court to determine whether emails, draft reports or commentaries on the reports exchanged in 2022 between Venture Global and the independent engineer responsible for monitoring construction of Calcasieu Pass existed and were not produced during the arbitration, the transcript showed.

A Venture Global representative said during the hearing the independent engineer was Lummus, the transcript showed. Lummus has not previously been named as Venture Global's independent engineer.

Lummus did not immediately respond to requests for comment. Shell and Venture Global both declined to comment.

Justice Joel Cohen, who is presiding over the case, considered communication between Venture Global and the independent engineer about the Calcasieu Pass plant may exist, but expressed skepticism over whether such a document could be used to overturn an arbitration award built on a large amount of other documents.

"Why would it be reasonable to think that that kind of communication between a consultant and the respondent would wipe away all of these independent and alternative grounds for them coming at the way they did," the judge said during the hearing, according to the transcript.

Shell argued the communications between Venture Global and the engineer were central because the arbitration panel relied heavily on the independent engineer's testimony to rule in favor of Venture Global.

Venture Global said during the January 12 hearing that the arbitration had spanned 27 months, involved about 130,000 pages of documents and cost over $41 million in fees and costs for the parties. It added that arbitrators had rejected Shell's request to obtain the discovery three times.

The LNG firm said it had produced all documents asked for, and that Shell was improperly asking the court to relitigate the arbitration panel's decision.

The judge's decision is pending.

Shell alleges that Venture Global failed to deliver LNG under long-term contracts while selling on the spot market instead as prices soared after Russia's invasion of Ukraine. Venture Global has denied the claims, saying it delayed moving to commercial operations because of a faulty electric system that did not allow the Calcasieu Pass plant to operate optimally.

(Reporting by Stephanie Kelly and Francesca Landini; Editing by Nathan Crooks and Nia Williams)

((Stephanie.Kelly@tr.com))

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