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Shell and Total Reject CNOOC Force Majeure on LNG Shipments

Gasoil News - Published on Tue, 18 Feb 2020

Image Source: OE Digital
Bloomberg reported that Shell and Total have rejected a force majeure on liquefied natural gas contracts iby CNOOC. While CNOOC is still likely to cancel delivery of the prompt cargoes, suppliers will probably seek compensation from the Chinese firm. CNOOC made the dramatic move as it struggled to take delivery of LNG because of constraints caused by the virus, which include a lockdown of more than 50 million people in more than a dozen cities. It was one of the first known cases of the legal clause being invoked in commodity contracts due to the epidemic, which has plunged raw materials markets into chaos.

Other Chinese firms, including PetroChina Co and Sinopec Group, are mulling invoking force majeures on contracts, but haven’t officially declared yet. PetroChina was forced to delay discharge timings for multiple cargoes because it can’t get enough workers to its Rudong, Dalian and Caofeidian LNG terminals to run them at full capacity.

At least five LNG vessels headed to China have been diverted or are idling offshore as the coronavirus constrains the country’s ability to take deliveries and cuts demand

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Posted By : Nishith Sharma on Tue, 18 Feb 2020
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