Qatargas-Exxon dispute Force Majeure at P-LNG

Vol 23, PW 11 (09 Apr 20) People & Policy

Qatargas and ExxonMobil are calling on Petronet-LNG to justify its decision to declare Force Majeure for three cargoes scheduled for delivery at Dahej over March and April (2020).

This report learns Qatargas responded in writing on March 31 to Petronet-LNG's March 26 Force Majeure notice and asked for supporting documents. Qatargas was scheduled to send one cargo to Dahej aboard tanker Disha in the third week of March and another in the first week of April but is holding off on both.

Similar is the story with an ExxonMobil cargo meant to arrive mid-April from the Gorgon facility. "Qatargas and Exxonmobil have not accepted Force Majeure yet," confirms a Petronet-LNG source.

"Qatargas is asking for additional supporting documents; they should have accepted Force Majeure over the Coronavirus lockdown in India, but they are asking for more justification." Petronet-LNG argues that the demand for R-LNG has reduced by almost 50% as a direct consequence of the global Coronavirus pandemic.

"Under normal circumstances, our throughput is up to 67m cm/d," adds our source. "But industries are closing down because of the lockdown, and the current throughput has reduced to around 40m cm/d."

If Qatargas doesn't agree, Petronet-LNG believes it will have no option but to call on the oil ministry to begin government-to-government talks. If all else fails, speculates an analyst, Petronet-LNG will either incur take-or-pay charges or sell the cargoes at a loss on the open market.