Crude quality disputes

摘要

UK supermajor BP is seeking at least $59MM in damages against Delta Airlines-owned Monroe Energy, accusing the company of wrongfully terminating a crude oil supply contract last year. Monroe signed a three year deal with BP in 2015 to supply Eagle Ford or Bakken crude to its 185K-b/d Trainer, Pennsylvania (US) refinery on the US East Coast. In June 2016, however, Monroe terminated the deal, saying that BP was blending batches of Eagle Ford that did not met the API gravity specifications in the contract. BP has responded that commingling crudes from different wells in the same field is a routing industry practice. "Monroe's allegations were nothing more than an unfounded pretext to terminate," the company said. The contract was signed in August 2014. The terms, which specified $8.35 and $7.35 above the benchmark prices for Eagle Ford and Bakken respectively, were very favorable for Monroe at the beginning of the contract when US oil was traded at a major discount to Brent. However, the discount collapsed in late 2015 as the US lifted the export ban. It is now cheaper for East Coast refiners to import oil.