Venture Global’s Calcasieu Pass LNG facility earns investment-grade ‘BBB-‘ rating from S&P, signaling strong growth in U.S. LNG infrastructure

In a significant development for the global liquefied natural gas (LNG) market and a testament to the robust execution of its projects, Venture Global LNG announced a major credit rating upgrade for its flagship Calcasieu Pass LNG export facility. S&P Global Ratings, one of the world’s leading independent credit rating agencies, has elevated the project’s credit rating to an investment-grade ‘BBB-’ from its previous ‘BB+’ status. This pivotal upgrade, affecting the facility’s $4.75 billion outstanding senior secured notes and approximately $900 million outstanding construction term loan, marks a new chapter for Venture Global and underscores the growing maturity and reliability of U.S. LNG infrastructure.

The upgrade comes on the heels of several critical milestones achieved by Calcasieu Pass. The facility officially commenced commercial operations on April 15, 2025, marking the full transition from construction and commissioning to stable, long-term production and delivery of LNG under its extensive portfolio of long-term sales and purchase agreements (SPAs). Furthermore, the project successfully completed the crucial lenders’ reliability test (LRT) in May 2025, a key hurdle that validates its operational integrity and sustained performance.

According to the detailed ratings note issued by S&P, the outlook on the rating is stable. This stability reflects S&P’s confidence in the inherent strength of the project’s off-take agreements, which provide a predictable revenue stream, and the expectation that Calcasieu Pass will consistently generate LNG volumes at or above its nameplate capacity on a sustained basis. This positive assessment by S&P is not just a win for Venture Global but also sends a strong signal to the broader financial community about the de-risked nature and long-term viability of well-structured LNG export projects in the United States.

Understanding the Upgrade: What ‘BBB-‘ Means for Venture Global and the Market

To fully appreciate the significance of S&P’s decision, it’s essential to understand what a credit rating signifies and the implications of achieving investment-grade status.

A credit rating is an independent assessment of a borrower’s ability to meet its financial obligations. Agencies like S&P Global Ratings, Moody’s, and Fitch Ratings analyze a company’s financial health, industry position, management quality, and economic outlook to assign a letter grade. These grades provide investors with a quick snapshot of the risk associated with lending money to a particular entity or project. Ratings typically range from ‘AAA’ (highest quality, lowest risk) down to ‘D’ (default).

The threshold between ‘BB+’ and ‘BBB-‘ is particularly critical: it divides the speculative grade (or “junk bond”) category from the investment-grade category.

• Speculative Grade (‘BB+’ and below): Projects or companies rated in this category are considered to have a higher risk of default. They often face higher borrowing costs because lenders demand greater compensation for the increased risk. Their access to capital markets can be more limited, often restricted to specialized investors willing to take on more risk.
• Investment Grade (‘BBB-‘ and above): Achieving investment grade is a significant milestone. It signals to the market that the project or company is financially sound and has a low risk of default. For Calcasieu Pass, this means:
  • Lower Borrowing Costs: The project can now access a wider pool of investors, including large institutional investors like pension funds and insurance companies that often have mandates to invest only in investment-grade securities. This increased demand for its debt typically leads to lower interest rates on future borrowings, reducing the cost of capital.
  • Enhanced Financial Flexibility: With a stronger rating, Venture Global may find it easier to refinance existing debt on more favorable terms or secure new financing for its ambitious pipeline of future projects.
  • Increased Investor Confidence: The upgrade acts as a seal of approval, boosting confidence among existing and potential investors, partners, and customers. It reflects positively on Venture Global’s management, project execution capabilities, and overall business strategy.
  • Broader Investor Base: Many large institutional investors are restricted by their charters or regulations from investing in non-investment-grade debt. The ‘BBB-‘ rating opens the door to this vast pool of capital, potentially increasing demand for Calcasieu Pass’s bonds and improving their liquidity in secondary markets.

S&P’s stable outlook further reinforces the positive assessment, indicating that the agency does not foresee any immediate factors that would lead to a downgrade in the near to medium term. This stability is rooted in the project’s proven operational performance and the robust nature of its long-term contracts.

Calcasieu Pass: A Landmark Achievement in U.S. LNG

The Calcasieu Pass LNG facility, located in Cameron Parish, Louisiana, represents a groundbreaking achievement in the U.S. LNG export landscape. It is Venture Global’s first operational facility and has been a pioneer in the development of modular, mid-scale liquefaction technology. This innovative approach, utilizing factory-fabricated modules, allowed for a significantly faster construction timeline compared to traditional large-scale LNG plants.

The journey of Calcasieu Pass has been marked by several key phases:

• Final Investment Decision (FID): Venture Global reached FID on Calcasieu Pass in August 2019, securing the necessary financing to proceed with construction. This was a critical step, demonstrating investor confidence in the project’s viability.
• First LNG Production: The facility commenced producing LNG in January 2022, a remarkable feat given the complexities of such a large-scale energy project. This “first gas” milestone signaled the successful commissioning of its liquefaction trains.
• Commercial Operations Date (COD): The formal commencement of commercial operations on April 15, 2025, signifies that all liquefaction trains are fully operational, producing LNG at a sustained rate, and fulfilling the terms of its long-term sales and purchase agreements. This is the point at which the project truly begins to generate its intended revenue streams.
• Lenders’ Reliability Test (LRT): The successful completion of the LRT in May 2025 was a crucial validation for the project’s lenders. This test typically involves demonstrating sustained output at or above a specified capacity for a defined period, proving the plant’s reliability and ability to meet its contractual obligations. Passing the LRT de-risks the project significantly for its financial backers.

Calcasieu Pass has a nameplate capacity of 10 million tonnes per annum (MTPA). Its strategic location on the Calcasieu Ship Channel provides direct access to the Gulf of Mexico, facilitating efficient shipping of LNG to global markets. The rapid development and successful operation of Calcasieu Pass have established a blueprint for Venture Global’s subsequent projects and solidified its reputation as a nimble and effective developer in the highly competitive LNG sector.

Venture Global’s Ascendancy in the Global LNG Arena

Venture Global LNG has rapidly emerged as a significant player in the global energy transition, positioning itself as a long-term, low-cost provider of U.S. LNG. The company’s business model is vertically integrated, encompassing assets across the entire LNG supply chain: from natural gas procurement in resource-rich North American basins, through liquefaction and shipping, to regasification (though their primary focus is on the export side).

The company’s strategic vision is centered on leveraging abundant, low-cost U.S. natural gas to meet growing global energy demand, particularly as countries seek to transition away from more carbon-intensive fuels like coal. Their modular construction approach is a key differentiator, enabling faster project development and potentially lower capital costs, which contributes to their “low-cost provider” ethos.

Beyond Calcasieu Pass, Venture Global has an ambitious development pipeline:

• Plaquemines LNG: This is the company’s second facility, also located in Louisiana, which achieved first production of LNG in December 2024. Plaquemines LNG is designed with a nameplate capacity of approximately 13.33 MTPA and is already securing significant long-term SPAs with major global energy companies. Its rapid progression further demonstrates Venture Global’s ability to replicate its successful development model.
• CP2 LNG: Situated adjacent to Calcasieu Pass, CP2 LNG is another massive proposed project with a planned capacity of 20 MTPA. It has already secured numerous long-term contracts and is awaiting final regulatory approvals to proceed with construction.
• Delta LNG and Venice LNG: These are additional projects in Venture Global’s extensive portfolio, indicating a long-term strategy to become one of the largest LNG producers in the United States.

Collectively, Venture Global is constructing and developing over 100 MTPA of nameplate production capacity. This aggressive expansion strategy positions the company to be a critical supplier of clean, affordable energy to the world for decades to come, playing a vital role in global energy security and decarbonization efforts.

The Global LNG Landscape: Demand, Supply, and U.S. Dominance

The global LNG market has undergone a dramatic transformation in recent years, driven by a confluence of factors including geopolitical shifts, increasing energy demand in emerging economies, and a global push towards cleaner energy sources.

• Growing Demand: Demand for natural gas, and specifically LNG, continues to rise globally. Countries in Asia, such as China, India, Japan, and South Korea, are major importers, relying on LNG to fuel their industrial growth and power generation needs. In Europe, the imperative to reduce reliance on pipeline gas, particularly from Russia, has significantly boosted demand for LNG imports, making the continent a crucial market for U.S. exporters. Natural gas is seen as a crucial “bridge fuel” in the energy transition, offering a lower-carbon alternative to coal and providing flexibility to complement intermittent renewable energy sources like wind and solar.
• U.S. as a Major Exporter: The United States has emerged as a powerhouse in LNG exports, rapidly becoming one of the world’s largest suppliers. This surge is primarily due to the abundance of low-cost shale gas resources and significant investments in liquefaction and export infrastructure. U.S. LNG provides supply diversity and flexibility to global markets, enhancing energy security for importing nations. The ability of U.S. facilities to load cargoes quickly and deliver them to various destinations based on market demand makes them highly attractive.
• Market Dynamics: The market is characterized by long-term contracts (like the SPAs Calcasieu Pass has) that provide stability for both producers and buyers, alongside a growing spot market that allows for more flexible trading. Geopolitical events, such as conflicts or disruptions in traditional energy supply routes, can significantly impact LNG prices and trade flows, highlighting the strategic importance of reliable suppliers like the U.S.

The continued success of projects like Calcasieu Pass is vital for maintaining the U.S.’s position as a leading LNG exporter and for meeting the world’s evolving energy needs.

The Power of Offtake Agreements: De-risking Billions

The S&P rating note explicitly highlights the “strength of the off-take agreements” as a key factor in the stable outlook. This emphasis is well-placed, as long-term off-take agreements, specifically Sales and Purchase Agreements (SPAs) in the LNG industry, are the bedrock of project finance for multi-billion-dollar infrastructure developments.

An off-take agreement is essentially a contract between a producer (in this case, Venture Global) and a buyer for the future purchase of a portion of the producer’s output. For LNG projects, these SPAs typically span 15 to 20 years, sometimes even longer, and commit buyers to purchase specific volumes of LNG at pre-agreed pricing formulas (often indexed to oil prices or natural gas benchmarks like Henry Hub).

The importance of these agreements cannot be overstated:

• Revenue Certainty: SPAs provide a guaranteed revenue stream for the project, regardless of short-term market fluctuations. This predictability is crucial for servicing the massive debt incurred during construction.
• De-risking for Lenders: Lenders providing billions of dollars for project construction require assurance that the project will generate sufficient cash flow to repay the loans. Long-term SPAs with creditworthy counterparties significantly de-risk the project, making it more attractive for financing. Without these contracts, securing project finance would be exceedingly difficult, if not impossible.
• Project Viability: The existence of robust off-take agreements is often a prerequisite for reaching a Final Investment Decision (FID) for major energy projects. They demonstrate market demand and the commercial viability of the venture.
• Global Reach: Venture Global has secured SPAs with a diverse range of global energy companies and utilities from Europe and Asia, including companies like Shell, BP, Edison, Repsol, PGNiG, and others across its projects. This diversification minimizes reliance on any single market or buyer, further enhancing the project’s stability.

The fact that Calcasieu Pass is now delivering LNG under these agreements, and has passed its reliability test, confirms that these contracts are now actively translating into tangible revenue and operational stability, justifying S&P’s positive assessment.

Sustainability in Focus: Venture Global’s Carbon Capture and Sequestration Initiatives

In an era of increasing environmental scrutiny and a global imperative to reduce carbon emissions, Venture Global is not only focused on delivering affordable energy but also on doing so more sustainably. The company’s commitment to Carbon Capture and Sequestration (CCS) projects at each of its LNG facilities is a significant aspect of its long-term strategy and a response to evolving market demands for cleaner energy.

CCS technology involves capturing carbon dioxide () emissions from industrial processes, such as natural gas liquefaction, and then transporting and storing them deep underground in geological formations, preventing them from entering the atmosphere.

For Venture Global, integrating CCS into its LNG operations offers several benefits:

• Reduced Carbon Footprint: By capturing CO_2 emissions directly from its liquefaction plants, Venture Global can significantly lower the carbon intensity of its LNG. This makes its product more attractive to buyers who have their own decarbonization targets and are seeking lower-emission energy sources.
• Meeting Regulatory Requirements: As environmental regulations become stricter globally, investing in CCS can help Venture Global comply with current and future emissions standards, potentially avoiding penalties or taxes on carbon emissions.
• Competitive Advantage: Offering “greener” LNG can provide a competitive edge in the market, appealing to environmentally conscious consumers and governments.
• Long-Term Sustainability: Investing in CCS demonstrates a commitment to the energy transition and positions Venture Global as a responsible energy producer, aligning with broader global efforts to combat climate change.

Venture Global’s proactive approach to CCS reflects a growing trend in the energy industry to integrate environmental considerations into core business strategies, recognizing that sustainability is not just a regulatory burden but an opportunity for innovation and market differentiation.

Looking Ahead: Implications for Future Growth and Investment

The S&P upgrade of Calcasieu Pass to investment grade is more than just a financial technicality; it has profound implications for Venture Global’s future growth trajectory and the broader investment landscape for U.S. LNG.

• Catalyst for Future Projects: The success and financial de-risking of Calcasieu Pass serve as a powerful precedent for Venture Global’s other ambitious projects, including Plaquemines LNG and CP2 LNG. Lenders and investors will view these subsequent projects with greater confidence, potentially leading to easier financing, more favorable terms, and faster development timelines. This could accelerate the pace at which Venture Global brings additional LNG capacity online.
• Enhanced Access to Capital: With an investment-grade project under its belt, Venture Global as a whole may find it easier to raise capital for corporate-level initiatives, not just project-specific financing. This could include tapping into a wider range of debt and equity markets.
• Strengthened Partnerships: The improved credit profile enhances Venture Global’s standing with its existing long-term customers and attracts new potential off-takers. Buyers are more comfortable entering into multi-decade contracts with a financially stable and creditworthy supplier.
• Industry Benchmark: Calcasieu Pass’s journey from FID to commercial operations and now to investment-grade status sets a benchmark for efficient project execution in the U.S. LNG sector. It demonstrates that with the right strategy, technology, and commercial agreements, large-scale energy infrastructure can be developed rapidly and reliably.
• U.S. Energy Security Role: As global energy markets remain volatile, the consistent and reliable supply of LNG from U.S. facilities like Calcasieu Pass reinforces the United States’ role as a crucial pillar of global energy security. The ability to export significant volumes of natural gas provides a flexible energy source that can help stabilize international markets during periods of disruption.

Conclusion

The upgrade of Venture Global’s Calcasieu Pass project to an investment-grade ‘BBB-’ by S&P Global Ratings is a landmark achievement, signifying the successful culmination of years of strategic planning, innovative engineering, and diligent execution. It validates the project’s operational reliability, the strength of its commercial contracts, and Venture Global’s overall business model as a low-cost, long-term provider of U.S. LNG.

This financial milestone will undoubtedly bolster investor confidence, reduce future borrowing costs, and enhance Venture Global’s capacity to finance its extensive pipeline of upcoming LNG projects. As the world continues its complex energy transition, the consistent and sustainable supply of natural gas from facilities like Calcasieu Pass will remain indispensable, cementing Venture Global’s position at the forefront of the global energy landscape. The future looks bright for this ambitious U.S. LNG exporter.

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photo source: Google

By: Montel Kamau

Serrari Financial Analyst

2nd July, 2025