Oil and gas: drill up & # 39; termination for force majeure

in September 2014, Ghana and d & # 39 Coast, Ivory reached an arbitration under the United Nations Convention on the law of the sea to settle a dispute between them as to border the two were lying states. Côte d & # 39; Ivoire managed to get a prescription of provisional measures ( " PMO ) containing the & # 39; following order:" Ghana take all necessary measures to s & # 39; ensure that & # 39; no new drilling is conducted by Ghana or control takes place in the disputed area "part of the disputed area included ten L & # 39;.. ODB effect meant that although l & # 39; you can continue to dig spudded wells in TEN, no new wells could be drilled

Tullow were several wells that were being spudding with the last well to be completed in September 2016.. once these have been completed, Tullow had the & # 39; intention & # 39; use the platform for its use in the Jubilee (baduming that the government had given its approval to the Plan of the Great Jubilee) .

However, a technical problem has also surg i used on the FPSO in the Jubilee Field in February 2016, which meant, according to Tullow Ghana n & # 39; was not willing to approve the Greater Jubilee Plan.

Tullow & # 39; his attempt to s & # 39; press the issue of the PMO as an & # 39; force majeure under the contract, which the & # 39; prevented giving drilling instructions Seadrill (that Tullow said to be an obligation under the contract) and finally allowed him to terminate the contract. 005] However, Seadrill argued that the refusal of Tullow pay the & # 39; hiring n & # 39; was not unrelated to the & # 39; collapse of oil prices in 2014 resulted in a reduction of the platforms demand forms like West Leo and consequently a substantial reduction in rental rates daily market for these platforms, d & # 39; about $ 600 000 per day to $ 150 000 to $ 200 000 per day at the end of 2016.

Decision

the commercial court considered two key questions:

1. with its obligations under the contract in October 2016 was a case of force majeure, namely a moratorium on drilling imposed by the Government of Ghana ; and
2. If the answer to the first question was yes, Tullow had he made reasonable efforts to remedy or avoid force majeure?

To resolve the first issue, the Commercial Court ruled that:

1. First, a letter issued by the Government of Ghana in May 2015, with a clear expectation that Tullow had to conform to the PMO, was sufficient to constitute a drilling moratorium imposed by the government (despite the & # 39; absence & # 39; a formal order or & # 39; a directive)
2. Second, notwithstanding the ability of Tullow continue drilling of existing wells up & # 39; in September 2016, the commercial court found that the moratorium was imposed in the & # 39; sending this letter in May 2015, even s & # 39; it n & # 39; has not bitten West Leo until & # 39; in October 2016. [19659024] Third, regarding the fact that & # 39; a force majeure must relate to a " breach of a term or condition of the contract " could Lull was reasonable to badume that the & # 39; intention to publish a drilling program, but was prevented from doing so due to & # 39; a moratorium on drilling imposed by the government, Tullow could say that & # 39; it n & # 39; has violated a clause of the contract (ie, section 2 (A) , clause 18.1). Seadrill to provide a drilling program). However, Tullow seemed to have the discretion to & # 39; issue or not such a program.
3. Fourth, Tullow n & # 39; was no reason to claim that the only question was whether the moratorium was a case of force majeure. Section 2 (A), clause 27.1 of the contract requires that Tullow was prevented or delayed in the & # 39; performance of its obligations by an event that is a case of force majeure. Therefore, there is a clear causal requirement between force majeure and failure to provide Tullow drilling instructions Seadrill.
4. Fifth, to determine if the moratorium was due to the & # 39; inability Tullow executing a drilling program, the moratorium and the & # 39; failure of the government to approve the Great Plan of the Jubilee was a wide view of sense of position, causing the & # 39; inability to Tullow. Tullow s & # 39; s expected to get & # 39; approval of the Greater Plan and Tullow Jubilee could not claim that Tullow n & # 39; had never had the right to work in the Greater Jubilee Field pending approval. There were two real causes for which Tullow was unable to provide drilling guidelines in October 2016, the & # 39; one being a case of force majeure and & # 39; other not.
5. Sixth, the decision of the Court & # 39; call in Intertradex v Lesieur [19659032] 2 Lloyd & # 39; s Reports 509 that where two cases had the effect of & # 39; prevent a seller d & # 39, ship goods, a notice of force majeure must be given to the & # 39; respect of each of & # 39; them. When the notice n & # 39; was given as to & # 39; one, the seller could not invoke the force majeure clause. This decision is considered a decision establishing that & # 39; a case of force majeure shall be the sole cause of the & # 39; breach of & # 39; an obligation (see Frustration and force majeure Sir Guenter Treitel third paragraph 12. Consequently, as regards the first question, Tullow n & # 39; has not established force majeure as effective because of its inability to issue an n & # 39 program was not a case of strength major.

   Although the commercial court has recognized that the question did not arise purely because of the failure by Tullow to the question of force majeure, the commercial court decided that Tullow was to provide Seadrill drilling instructions on some wells Jubilee in particular, the fact that Tullow n & # 39;. has failed to take corrective measures because & # 39; they were technically less direct or paid was considered insufficient because Tullow were up not the interests of Seadrill beside his. The Commercial Court confirmed that the & # 39; inability to Tullow reasonable efforts was another reason Tullow could not invoke the force majeure clause.

   Tullow received the & # 39; s order & # 39; to make Seadrill a payment & # 39; approximately 254 million.

   19659004] UK courts are cautious to & # 39; against oil companies resilient d & # 39 contracts drilling unit for alleged violation or force majeure at times when the rate of & # 39; equipment fell. This case is part of & # 39; a list of cases in which, for many years, the English courts have ruled against the oil companies seeking to terminate such circumstances. Oil companies should therefore remain cautious when & # 39; they terminate d & # 39 contracts; drilling unit in a down market.

   In addition, the & # 39; case highlights a number of drafting issues that parties should keep in & # 39; mind. If a part of the definition of force majeure is " any breach of a condition of the contract ", it could s & # 39; be difficult for an oil company to claim force majeure as its obligations performance under the contract & # 39; drilling unit may be limited. In the & # 39; case, the Commercial Court seemed doubtful that Tullow has breached a contractual obligation, given that & # 39; drilling programs broadcast could be discretionary.

6. Unless otherwise specified, simultaneous barriers to & # 39; execution, including & # 39; a is a force majeure. This generally does not mean that the force majeure clause will be respected. If such concurrent causes are believed to result from force majeure clauses in the contract to excuse performance, it would be wise to & # 39; use a specific language to achieve this. In the & # 39; case, the Commercial Court found that simultaneous barriers to the provision meant that & # 39; n it & # 39; there was no force majeure.
7. In this respect, if the failure to provide a program or a drill site is a category of "violation" caused by a force majeure event is to trigger the force majeure clause, an oil company may wish that & # 39; scope of work in the contract to be carefully defined location to ensure that the clause is triggered. A force majeure clause will generally not be interpreted as being applicable if d & # 39; other methods of & # 39; execution exist. On many occasions, it will be allowed, under the d & # contract 39; drilling unit, program or & # 39; instruct drilling in another place – this n & # 39; cause any force majeure.