Venture Global sold its third-quarter LNG at a liquefaction fee of $6.79 per MMBtu. A spot cargo would have earned about $17.43. The difference didn't just vanish. Most of it went to the buyers.
On October 7, Venture Global reported 465.8 TBtu sold in the quarter. On the company's own formula, JKM less 115% of Henry Hub less $2, that leaves roughly $7.0 billion of spread above Calcasieu Pass's $2.36 contract fee. By my split, Calcasieu's 20-year buyers kept about 30%, the buyers of Plaquemines' forward-sold cargoes kept 41%, and Venture Global kept 29%. Those are my estimates. The company only reports one blended fee.
So the war quarter mostly paid the people holding contracts. The bigger question, for anyone signing supply now, is what the fee does once the war premium is gone and the plants under construction start up.
Why the fee history misleads
The case for merchant LNG leans on long-run averages. A Venture Global slide shows a 2010-26 fee median of $5.19. That median mixes two very different markets. On the IMF's numbers, the fee averaged $18.80 in 2021-22 and is somewhere between $10.80 and $11.90 so far this year. Through the 2015-20 supply wave, it was $0.45 on TTF and $1.62 on JKM. In between, 2023-25 paid about $7, and Argus has Gulf Coast spot beating a long-term contract by $4.11 to $5.37 in each of those years. Mind you, those were years of a market healing after a shock. A wave was nowhere in sight.
Now, the futures think the wave is coming. On October 7 settlements, the implied fee is $15.41 for 2027, $8.03 for 2028, $5.12 for 2029, $3.80 for 2030, and $2.50 for 2031. One caveat: 2030-31 had no open interest at all, so those last two are marks. Nobody traded them.
Counting the plants
I didn't want to lean on the strip alone, so I built supply plant by plant. I start with the 524.5 MTPA the IGU counts as operating at the end of 2025 and add 24 sanctioned projects, 249 MTPA in total, each on its developer's latest timetable. That runs from Golden Pass, Port Arthur, Rio Grande, CP2, and Woodside Louisiana to Qatar's North Field East and South. I run plants at 84%, the IGU's 2025 utilization, which gets 2025 trade right to within 1%. Then I take off the IEA's war losses and its estimate of feed-gas losses at older plants.
On that build, supply runs 9% above GECF's demand path in 2030, 17% above the midpoint of GECF and Shell, and 26% above Shell's.
I wasn't going to trust that for the 2030s without checking it against the past, so I ran the same setup over 2015 to 2025. My first version sorted years into glut, balanced, and shortage, and it got only 4 of 11 years right. I tossed it away. A straight line does better. Each point of surplus took about $0.46 off the fee, and the fit puts a balanced market at about $3.00. It explains about 46% of the moves outside 2021-22 and misses those two years completely, because Russia's pipeline cut came from outside the LNG balance.
The part I'm least sure about: approvals
From here, the fee depends on how quickly the industry approves new plants, and approvals react to price. On the IGU's numbers since 2016, the industry approved about 25 MTPA a year after cheap years and about 41 after expensive ones. Contracts tend to come first. Buyers signed 54 MTPA with US developers in 2022, a year before the 2023 approvals, and 40 MTPA in 2025, ahead of this year's CP2 Phase 2, Commonwealth, and Delfin decisions.
The number I keep coming back to is $4.49. That is roughly what Venture Global's uncontracted cargoes need to average from 2032 to justify its October 7 share price of $13.05 (I wrote the equity side up separately). On the midpoint demand path, the fee only gets there if approvals stay under about 28 MTPA a year (22 to 33, depending on how fast older plants fade). The industry's own behavior implies about 30. On GECF's path, it works with 39 to 50 a year. On Shell's, it needs under 6 to 17. Run 2,000 paths per case, with Russia- and Hormuz-sized shocks arriving at their 2011-26 rate, and the fee clears $4.49 about 35% of the time: 0% on Shell's path, 6% on the midpoint, 100% on GECF's. In the end, it comes down to which demand forecast you believe.
What sellers can lock in, and what a new plant costs
Contract fees aren't spot forecasts. What they do show is what a seller can hedge. Since late 2023, reported 10-to-20-year US fees have run from $2.30 to $2.95 (Poten, Reuters), Argus's indicative contract is 115% of Henry Hub plus $3, and five-year deals are around $3.00 to $3.15. Vitol's five-year deal with Venture Global, signed three weeks into the war, priced near $3 while the 2027 strip implied about $8.70. None of them gets within $1.30 of $4.49.
On the developers' own FID costs, Woodside Louisiana, Rio Grande (excluding financing), and Port Arthur need $2.68 to $3.00 over a 35-year plant life at 8% after tax. Commonwealth needs $3.76. GECF puts the next batch of North American projects at $3.80 to $4.00. So the cheapest plants already being built can live with a fee near $3, which is about where the backtest says a balanced market settles.
What would change my mind
Hormuz is the big one, and it has got worse since I first put this together. QatarEnergy has now pushed force majeure on its deliveries to the end of December, LNG through the strait still hasn't recovered in any real way, and Dutch TTF hit its highest level since 2022 this week, around €97 a megawatt-hour. QatarEnergy's chief executive, Saad Al Kaabi, also says the two trains hit at Ras Laffan, roughly 17% of its capacity, need about three years to repair. If Gulf exports run at a quarter of normal through 2027 and half in 2028, with North Field East and South two years late, my model adds about $1.90 to the 2028 fee and $1.60 to 2029's. Faster approvals in response keep the long-run fee roughly where it is.
The more interesting news for this argument is who is signing. In the last ten days QatarEnergy, the biggest LNG exporter in the world, agreed to buy 4 MTPA from Cheniere through 2054, priced at Henry Hub plus a fixed fee, and up to 3 MTPA from Woodside's Louisiana LNG for 20 years from 2030. He says more deals are coming and that he is talking to Venture Global among others. Neither fee has been disclosed. That is the number I'd most like to see, because it is a buyer with the best view of Gulf supply locking in 2030s volume from US plants.
I'd change my view if US developers start signing 2029-31 volume at $4.49 or more (Qatar's new deals included, if the fees ever come out), if approvals stay below about 20 MTPA a year for two years while demand tracks GECF's path, or if Gulf exports are still near a quarter of normal at the end of 2027. The supply file, the backtest, and the model are public at github.com/brexitmiyagi/vg-war-rent-split. I have no position in Venture Global.
Venture Global reports its third quarter on November 10, which gives the next Plaquemines fee. A question for the people here who buy or sell gas: if you've signed LNG supply since 2024, did anyone price a 2030s surplus into the fee, or is everyone still anchoring on 2023-25? And if you think 84% utilization or the IEA's feed-gas losses are wrong for the US Gulf, I'd like to hear why.