An ICC tribunal has held that Venture Global's Calcasieu Pass unit breached its long-term LNG supply agreement with Portugal's Galp by failing to declare commercial operations in time. For anyone buying or selling term LNG, the award says a good deal about how far a seller can rely on problems at its own plant, and on a rising spot market, to put off performance.
Introduction
In a filing with the U.S. Securities and Exchange Commission, Venture Global said on Oct. 7, 2026, its subsidiary Venture Global Calcasieu Pass, LLC ("VG") was notified that a tribunal constituted under the rules of the International Chamber of Commerce ("ICC") had issued a partial final award in its dispute with Galp. By a majority, the tribunal held that VG had violated its obligation under the parties’ LNG sale and purchase agreement (“SPA”) to announce the commercial operations date (“COD”) of the Calcasieu Pass project in a timely manner. One arbitrator dissented on that finding. Damages will be dealt with at a later hearing, which VG expects in 2027 or 2028, and VG says the final award should fall within the SPA's USD 170 million seller aggregate liability cap. This is VG's second loss over Calcasieu Pass cargoes, after the BP award of October 2025, and both awards hinge on the same question: how much latitude a long-term contract leaves a seller when the market moves sharply in its favour before its plant is formally up and running.
The Dispute In Brief
Calcasieu Pass, a 10 mtpa facility in Louisiana, loaded its first cargo in March 2022, shortly after Russia's invasion of Ukraine sent gas prices sharply higher. VG did not declare COD until 15 April 2025. In the intervening three years, it is reported to have sold some 400 cargoes on the spot market, at prices well above those agreed with its term buyers. Shell, BP, Repsol, Galp, Edison, Orlen and Sinopec each began arbitration, alleging that gas committed to them had been diverted to the spot market.
VG's position throughout has been that its delivery obligations had not yet started. Under each SPA, the start of term supply was tied to COD; COD had been held up by problems with the plant's power island equipment; and cargoes produced during commissioning were VG's to sell.
Tribunals have not been consistent. VG won against Shell in August 2025 and later against Repsol, and saw off a court challenge to the Shell award. BP, on the other hand, obtained a partial final award that VG had failed to declare COD in a timely manner and had not acted as a "Reasonable and Prudent Operator" under its SPA. VG settled with Edison, and the Orlen arbitration is still pending. The Galp award itself is not public, but VG's own disclosure confirms that the majority's finding, like the one in BP's case, centred on the timing of COD.
Is This A Force Majeure Case?
Not in the strict sense. VG did not say that an outside event prevented it from delivering; it said that it was not yet obliged to deliver. Much of the commentary on the dispute has run the two arguments together. They are different, although they lead back to the same point: a seller will struggle to rely on problems at its own plant to get out of a bargain that has become less profitable than the spot market.
Force majeure clauses are construed strictly. A party relying on one will usually have to show an event outside its reasonable control, that the event actually caused the failure to perform, that notice was given on time and that it took reasonable steps to mitigate. The clause does not operate automatically, and claims regularly fail on the drafting, on a narrow reading of the words, or simply on the evidence. A breakdown of equipment within the seller's own facility is a weak basis for relief, because the inquiry quickly turns to whether a prudent operator would have prevented or overcome it. A more lucrative market is not force majeure at all. When the Suez Canal closed in 1956, courts on both sides of the Atlantic refused relief to parties forced onto the longer and costlier route around the Cape. The House of Lords did so in Tsakiroglou & Co Ltd v Noblee Thorl GmbH [1962] AC 93, and a US federal appeals court did the same in Transatlantic Financing Corp v United States (1966), on the basis that added expense is exactly the risk a fixed-price contract allocates. The position is broadly similar across the major legal systems. The threshold for relief is high, and the wording of the contract usually matters more than the name given to the doctrine.
Events in India earlier this year show what genuine force majeure looks like. In March 2026, Petronet LNG issued force majeure notices to QatarEnergy and to its domestic customers after tankers were unable to transit the Strait of Hormuz safely to load at Ras Laffan, and GAIL reported that its allocation from Petronet had fallen to zero. Performance there was physically blocked by something outside the parties' control. At Calcasieu Pass, by contrast, VG was producing, loading and selling cargoes throughout. The gas was available; it was simply going to other buyers at higher prices.
Take-Or-Pay And Price Review: Rigidity By Design
Long-term LNG contracts give up flexibility in return for investment certainty. Most of the world's LNG is still sold under long-term contracts, commonly running for 15 to 20 years or more, because export terminals costing billions of dollars are rarely financed without them. The rigidity of these contracts is the price of getting plants built, and both sides carry it.
On the buyer's side, it takes the form of take-or-pay: the buyer pays for a minimum quantity whether or not it lifts the gas. The clause lets the buyer adjust volumes when conditions change, while compensating the seller for keeping capacity available. Indian buyers have been wary of it, and Petronet's chief executive has said publicly that long-term deals involve more than price, pointing to the penalties a buyer faces for failing to take contracted volumes. Whatever view one takes of the clause, there is an obvious inconsistency in a seller holding its buyer strictly to take-or-pay when prices fall, and then claiming release from its own delivery obligations when prices rise.
Price-review clauses deal with movement in long-run pricing, usually through oil-indexed or Henry Hub-linked formulae. In arbitration, price re-opener and hardship clauses have been the main route through which long-term gas contracts are adjusted, and whether a tribunal may rebalance a contract that contains no such clause remains a contested question. A price-review right, however, operates only on price. It gives the seller no right to send the gas elsewhere.
Destination And Allocation Provisions
Destination clauses limit where a buyer may deliver or resell cargoes. A buyer bound by one cannot take advantage of a price spike in the way a seller selling spot can, which goes a long way to explaining why buyers now press for diversion rights and profit-sharing arrangements.
Allocation provisions deal with a separate question: who gets the gas when the seller cannot meet all of its commitments? A well-drafted clause shares available volumes pro rata among term buyers and puts spot and affiliate sales at the back of the queue. Without one, whether a seller must prefer its contracted buyers over the spot market depends on the construction of the particular contract; there is no general rule to that effect. This is why the commissioning-phase wording carried so much weight in the Shell award, and why the attention the BP and Galp tribunals gave to COD and to the prudent operator standard is worth noting.
Hardship, Termination And Damages Caps
Neither English nor Indian law offers much by way of a hardship remedy. Section 56 of the Indian Contract Act, 1872 discharges a contract only where performance becomes impossible or unlawful. In Satyabrata Ghose v Mugneeram Bangur & Co AIR 1954 SC 44, the Supreme Court held that commercial hardship is not enough, and in Energy Watchdog v CERC (2017) 14 SCC 80 it refused to excuse generators whose power contracts had become less profitable after a regulatory change in Indonesia pushed up the cost of imported coal. Civil law systems are more accommodating: section 313 of the German Civil Code (BGB) and Article 357¹ of the Polish Civil Code both allow a court to adapt a contract after a fundamental change of circumstances. In each case, though, the remedy is there to help the party disadvantaged by the change. At Calcasieu Pass, the party that gained from the price movement was the seller.
The Galp SPA remains in force. VG reports that it has delivered 20 cargoes to Galp since COD, so the breach finding will lead to damages rather than termination. The liability cap is the more significant feature. BP, according to a court filing reported in March 2026, is seeking at least USD 3.7 billion from VG, whereas Galp's recovery is limited to USD 170 million, a modest sum for a company of VG's size. In practical terms, a cap sets the cost of not performing, and where that cost is lower than the profit to be made by selling elsewhere, the seller has a commercial incentive to breach.
What Indian Energy Buyers Should Demand
India's importers are returning to long-term supply, and a growing share of it will come from the United States. Before signing, buyers should look for the following:
- Objective COD triggers. A defined test for commercial operations, certified by an independent engineer, with a long-stop date after which the buyer can claim damages or terminate. Commissioning cargoes should be offered to term buyers first, or the proceeds shared with them.
- Narrow force majeure. Market movements and failures of the seller's own equipment should be expressly excluded, unless the failure results from an external event that a reasonable and prudent operator could not have avoided. Notice and mitigation requirements, and a right to terminate after a prolonged force majeure period, should be included.
- Priority and allocation. Term buyers should rank ahead of spot and affiliate sales in any shortfall, with pro rata sharing and audit rights over cargo records.
- Meaningful remedies. Damages for seller shortfall should be linked to the cost of replacement cargoes, and liability caps should not apply to wilful diversion.
- Flexibility on the buyer's side. Periodic price reviews, volume tolerances, make-up rights and diversion or resale rights, given Indian buyers' concerns about rigid take-or-pay terms.
Contract terms are not the only protection; supplier diversification matters as well. When a fire shut a Philips semiconductor plant in 2000, Nokia, which had alternative suppliers, recovered quickly, while Ericsson, which relied on that plant alone, reportedly lost around USD 400 million in sales. Petronet's dependence on Ras Laffan in March 2026 shows the same risk in the gas market.
Conclusion
Long-term LNG contracts are not inherently inflexible. What the Calcasieu Pass disputes show is that whatever flexibility each party needs has to be written into the contract, in terms clear enough that a tribunal does not have to fill the gaps. For buyers, that means doing the work at the negotiating stage, before the first cargo is loaded and well before the market moves.
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