Long-term contracts are not enough to offer stability
Key Takeaways:
Despite the perceived stability offered by long-term contracts, the LNG export business operates in a highly volatile commodity market.
The market’s uncertainty was underscored by lower-than-expected average fixed liquefaction fees earned by a pair of Venture Global export terminals.
The lower-than-expected figures prompted investors to cut Venture Global shares by 17%, wiping out $4 billion in shareholder value in a little more than a day.
A recent Venture Global failure to accurately predict terminal fees highlights the unpredictable nature of LNG exports, according to a new Institute for Energy Economics and Financial Analysis (IEEFA) briefing note.
Venture Global reported in early April that the number of LNG cargos shipped during the first quarter of 2025 met its projections, but fees from its Calcasieu Pass and Plaquemines LNG export terminals fell short of the company guidance—a projection that had been made less than a month earlier. The market responded by cutting the company’s stock price by 17%, wiping out $4 billion in shareholder value in a little more than a day.
“Venture Global’s inability to accurately project results just one month ahead highlights broader challenges in the LNG industry’s capacity to forecast long-term performance,” said Trey Cowan, IEEFA oil and gas analyst and author of the briefing note. “Despite strong incentives to provide reliable guidance, the company’s projections fell short, casting doubt on the industry’s ability to predict future outcomes.”
With additional LNG export capacity expected to come online, price volatility is unlikely to subside, further complicating forecasting efforts.
The uncertainty discussed in the briefing note suggests that significant caution is needed regarding the timing and scale of new LNG export projects to avoid capital misallocation on ventures that may underperform. Ultimately, this analysis underscores that the LNG market’s future—both in terms of LNG demand and LNG pricing—remains highly uncertain, with feedstock price volatility as the only consistent expectation.
