Force majeure and frustration in offshore oil and gas drilling, decommissioning and service contracts in response to a significant market disruption
Produced in partnership with Ben Holland and Michael Davar of Squire Patton Boggs
Force majeure and frustration in offshore oil and gas drilling, decommissioning and service contracts in response to a significant market disruption

The following Energy practice note produced in partnership with Ben Holland and Michael Davar of Squire Patton Boggs provides comprehensive and up to date legal information covering:

  • Force majeure and frustration in offshore oil and gas drilling, decommissioning and service contracts in response to a significant market disruption
  • What is force majeure?
  • What is frustration?
  • Practical considerations: offshore drilling and decommissioning
  • Is it reasonable for me to expect to rely on force majeure or frustration?
  • Can I rely on any other remedies?
  • Should I provide notification?
  • Should I prepare contingency plans in the event of a possible force majeure event?
  • Should I keep a record of any possible force majeure events?
  • Can I rely on force majeure where the effect is caused jointly by a force majeure listed event and a non-listed event?
  • More...

In the first half of 2020, the oil market was facing shrinking capacities to store over-supplied oil, collapsing prices and plummeting demand. Oil and gas operators and companies in the supply chain took steps to reduce activity and investment to protect cash flows.

Capex was reportedly reduced by tens of billions of dollars; contracted rigs were suspended, cold-stacked or cancelled; development of offshore fields were being delayed; and decommissioning and abandonment activity was pushed forward.

Meanwhile, coronavirus (COVID-19) spread across offshore facilities and vessels. Suspected or confirmed cases of COVID-19 were reported on the Clair Ridge, Brent Charlie, North Everest, Mariner, Brae Alpha, Martin Linge and Siem Marlin. In the North Sea, more than a dozen staff who presented with the virus had to be separated from their crew on the Cormorant Alpha. Medical evacuations have brought North Sea workers onshore after displaying symptoms. Under normal circumstances, 11,500 people would on average be working on North Sea projects at any one time. According to Oil & Gas UK, the UK industry trade body, by 20 March 2020, this figure was down by 4,500 (approximately 40%).

This raised and continues to raise difficult logistical decisions. What happens when those with the necessary expertise are quarantined? What happens when contracted service companies cannot comply with their obligations as a result, or where operations on a rig or platform are

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