US-Israel-Iran War: The US-Israeli war against Iran has now entered its tenth day with no sign of abating. On Monday (local time), Bahrain’s Bapco Energies, the kingdom’s main energy company that operates its only oil refinery, announced force majeure on operations that have been affected by the ongoing war in the Middle East, Bloomberg reported.
The company said its local market needs are being met. The development comes after Bapco Energies said last week that the 90-year-old refinery was damaged in an attack. Bapco’s decision to seek force majeure follows similar announcements by QatarEnergy regarding its shipments.
Here’s everything you need to know about Force Majeure:
What does force majeure mean?
Force majeure is a legal term used in contracts to describe unexpected events beyond the control of the parties that make it impossible to fulfill agreed obligations. Such events may include natural disasters such as earthquakes or floods, wars, pandemics, labor strikes or government actions. In a situation of force majeure, the affected party may be allowed to postpone, suspend or be excused from the performance of the contract without incurring any penalty. Simply put, this legal term provides protection in cases of unforeseen and unavoidable circumstances that prevent a party from fulfilling its contractual obligations.
Read also | Iran War Hits India’s LNG As Petronet, Qatar Energy Issue Force Majeure Notice
What happens when the company invokes force majeure?
When a company invokes force majeure, it can suspend or postpone its contractual obligations when extraordinary events such as war or disasters prevent performance. It means that the company that enforced it may not be able to deliver its shipments, especially oil, until the situation normalizes.
Who forced a higher power?
As tensions escalate in the Middle East region, several companies have implemented force majeure intervention. This includes companies in both the Middle East and Asia.
QatarEnergy
On March 4, QatarEnergy announced it was halting production of its liquefied natural gas (LNG) and other related products, declaring force majeure.
Screenshot of QatarEnergy’s X Post
Kuwait Petroleum Corporation
On March 7, Reuters reported that Kuwait Petroleum Corporation (KPC) also announced force majeure and reduced oil production as tensions escalated in the Middle East. The KPC invoked force majeure, citing security and logistical concerns. The company said Iran has threatened ships passing through the Strait of Hormuz, while continued Iranian attacks on Kuwait and the near absence of tankers in the Arabian Gulf have made it difficult to transport oil and oil products.
Mangalore Refinery and Petrochemical
Earlier this month, Mangalore Refinery and Petrochemicals Limited (MRPL) declared a force majeure on all gasoline exports for 2 months, until April, amid continued tensions in the Middle East. The state-owned refiner, which operates a 500,000 bpd refinery in Karnataka, exports nearly 40% of its refined fuel production.
Gujarat Gas Ltd
The company, which supplies gas to domestic and industrial clients, told the stock exchange that it had declared force majeure effective March 5 to limit gas supplies to industries. Gujarat Gas’ parent GSPC gets most of its supplies from Qatar and Abu Dhabi National Oil Co., which it sells to local customers.
Petronet LNG
In an exchange filing, India’s major gas importer issued force majeure notices to its supplier, QatarEnergy, and local customers such as GAIL, Indian Oil Corp and Bharat Petroleum Corp after three of its LNG tankers were unable to reach the Ras Laffan loading port.
Read also | Gail may cut LNG supply following Qatar supply freeze
Rayong Olefins
Rayong Olefins, a Thai petrochemical firm, a unit of Siam Cement Group, has declared force majeure due to the conflict in the Middle East.
Wanhua Chemical
China’s Wanhua Chemical also declared force majeure to its customers in the Middle East, Reuters reported on Monday.
Shell
South China’s petrochemical joint venture with China’s CNOOC plans to close an ethylene unit soon and has told domestic customers it is unable to supply some products.
Zhejiang Petrochemical Corp
A major Chinese refiner backed by Saudi Aramco also shut down a 200,000 bpd unit amid the ongoing crisis.
Yeochun NCC
Yeochun NCC, a South Korean petrochemical company, declared force majeure and reduced its production because it cannot receive diesel due to the blockade of the Strait of Hormuz.
PCS
Singaporean petrochemicals firm PCS also declared force majeure on supplies as war in the Middle East disrupted supply chains.
Aster Chemicals and Energy
On March 6, Singapore refiner and petrochemicals major Aster Chemicals and Energy reported force majeure on supplies, with its ethylene units running at 50%, after being restarted in late February.
Chandra Asri
Chandra Asri, an Indonesian petrochemical producer, has declared force majeure on all contracts amid ongoing tensions in the Middle East that have disrupted its raw material supplies.
Binh Son Refining and Petrochemical
Binh Son Refining and Petrochemical has called on the Vietnamese government to prioritize the supply of domestically produced oil for its Dung Quat refinery and limit oil exports until at least the end of the third quarter of this year to ensure national energy security, the company said in a statement.
