Our industry is known to be led by engineers and geoscientists; however, recent projects and deals are emphasizing a need for top-notch legal expertise. “Pre-emption rights,” “tax ring-fencing” and “commercial operations date” were quite specific legal terms for oil and gas businesses not long ago. Now, they have joined the lexicon and dialogue for our industry.
Increasingly, legal considerations, in addition to technical and commercial, are becoming a key part of major energy projects. Top-notch legal expertise and maneuvering are in high demand. International judiciary courts such as the International Chamber of Commerce have taken added relevance even in domestic issues.
Four deals and projects in 2025 have been greatly affected by legal considerations.
Venture Global LNG versus Shell and BP
An August arbitration ruling by the ICC stated that Venture Global LNG did not violate its contractual obligations to long-term contract holders. Three months later, Shell filed an appeal to the New York Supreme Court to vacate the ruling.
Shell and other long-term contract holders filed lawsuits against Venture Global LNG, alleging it made billions in profits by selling its LNG cargos at spot markets to take advantage of the higher gas prices, instead of honoring its delivery commitment to long-term contract holders. Shell claimed that Venture Global LNG earned about $20 billion on some 400 cargoes it sold between 2022 and 2025 to the spot market.
The overarching question in this deal is when Venture Global LNG reached the commercial operations date for its Calcasieu Pass LNG project in Louisiana. Venture Global LNG argued that it did not reach COD until April 2025. Before then, the company was shipping LNG cargoes during a precommissioning phase. In August, a New York arbitration court sided with Venture Global LNG’s position, much to the surprise of many LNG industry observers.
In its latest filing, Shell accused Venture Global of “misleadingly withholding critical evidence” at the November 2024 hearing. Shell argued that COD was achieved as early as October 2022 for the Calcasieu Pass LNG project, rather than April 2025, as Venture Global claimed.
Intriguingly, for a similar lawsuit between BP and Venture Global LNG in October, the ICC ruled in favor of BP, which caused Venture Global shares to drop 25 percent. BP is seeking financial damages of more than $1 billion.
With several other cases yet to be determined, including cases between Sinopec and European companies, Venture Global could be held liable for roughly $7 billion. Venture Global LNG shares have dropped to two thirds of their IPO price in January 2025. No doubt, lawyers will pay extra attention to how to craft tighter language around the definition and verification of COD for any future LNG project.
Chevron versus ExxonMobil
In July, the ICC ruled in favor of Chevron against ExxonMobil in the arbitration concerning Hess’ holdings in Guyana.
Guyana is one of the biggest exploration successes in the past two decades. ExxonMobil and its partners China National Offshore Oil Corporation and Hess have discovered more than 11 billion barrels of oil in the Stabroek Block in deepwater Guyana. ExxonMobil is producing 800,000 barrels of oil equivalent per day and on its way to producing 1.3 million barrels per day in the South American country.
Chevron announced its $53 billion acquisition of Hess in October 2023, with Hess’ equity in the ExxonMobil – operated Stabroek Block being a key coveted asset.
ExxonMobil and CNOOC argued that a tremendous amount of new value has been created since the beginning of the joint venture. Thus, ExxonMobil and CNOOC should have first right of refusal to Hess’ stake in the venture. Chevron and Hess argued that asset-level pre-emption rights do not apply to a corporate take-over case.
The ICC sided with Chevron, which immediately completed the acquisition on July 18 – 21 months after its initial announcement. Chevron’s market cap rose to $300 billion, widening its lead over the third largest international oil company Shell at $220 billion.
ExxonMobil has no choice but to take on Chevron as its partner in Guyana, as the two American giants continue to compete to lead within the Permian and the larger oil and gas industry.
Petrobras versus ANP
Ring fencing for tax treatment is a common issue for companies and state tax authorities around the world. In late October, the ICC issued a ruling in favor of the Agência Nacional do Petróleo, (or ANP, as they are better known), Brazil’s licensing agency, in a dispute with fellow national oil company Petrobras, allowing the government to keep $4 billion in tax payments.
The case centers on whether tax ring fencing should be applied to a specific geological structure or licensing block. Petrobras and its partners Shell and Galp Energia argued that two large deepwater oil fields, Tupi and Cernambi, both within the BM-S-11 Block in the Santos Basin, should be treated as separate tax entities as they are two different geological structures. ANP argues the fields are within the same license and should be ring-fenced as one.
According to Brazilian law, the bigger the oil reservoir, the higher the participation fees and taxes. ANP alleged that Petrobras tried to separate the fields within the BM-S-11 license to pay billions of dollars less in taxes to the state. The initial ruling by a local Brazilian court in 2019 sided with ANP and forced Petrobras and its partner to pay judicial deposits to cover the disputed amounts, totaling around 22 billion reais or $4.1 billion.
Petrobras decided to take the case to the ICC, which concurred with the interpretation of the local court. This is a rare example in which a national oil company had a legal dispute with its government and took the case to an international court. It remains to be seen how the ICC ruling might impact future ring-fencing.
Orsted versus Trump Administration
Denmark-based Orsted, the once shining star of a successful energy transition company, was already in trouble with its offshore wind initiatives in the United States before Trump returned to the White House.
The Trump administration immediately issued an executive order against offshore wind projects in the United States and issued two stop-work orders: the first in April to Equinor, for its operations of the Empire Project in offshore New York, and the second in August to Orsted for its operations of the Revolution Wind Project in offshore Rhode Island. Both projects were in the construction phase. Orsted said its project was 80 percent complete when it received the order.
Equinor successfully persuaded the Trump administration to withdraw the stop-work order. In September, Orsted obtained an injunction from a district judge in Washington to block its stop-work order.
In the meantime, the Trump administration is looking at several offshore wind projects along the east coast, and it remains to be seen what it will do to Orsted’s Revolution project.
Orsted’s stock has been down more than 90 percent from its peak in 2021. It raised $9 billion to shore up its balance sheet, sold some European offshore wind projects and will lay off more than 2,000 people as it faces the headwinds. Will Orsted be able to survive the legal and financial challenges going forward?