NEW YORK (
, the rig operator in the
oil spill, has rejected attempts by
to use the federal moratorium on offshore drilling as a way to renege on existing Transocean contracts.
Anadarko announced on June 3 that it had invoked the
clause, which it said gave it the legal right to nullify existing contracts. While Anadarko did not specify which rig operators were impacted, Transocean was among those that Street analysts expected to lose Anadarko contracts. Anadarko owns 25% of the leaking BP well.
Force majeure is a contract provision nullifying a contract due to an extraordinary event, such as a natural disaster, that disrupts business.
Transocean confirmed in a regulatory filing after the market closed on Tuesday that Anadarko had declared force majeure on two contracts, with a day rate currently above $500,000. Transocean said in the filing that it has rejected Anadarko's notice of force majeure and is in discussions with Anadarko to resolve the issue.
Transocean's Discover Spirit ship has a contract with Anadarko scheduled to expire in November 2010, and a second contract to take its place scheduled to expire in November 2013, according to the Transocean filing. The ship is drilling a 35,000 foot well at a depth of 10,000 feet, according to Transocean's filing.
was out ahead of Transocean in picking a fight with Anadarko over force majeure, saying shortly after Anadarko invoked force majeure with Noble that it would enforce the contract agreement with Anadarko.
Noble argued that as a global oil producer Anadarko can use the rig in other areas of the world if necessary.
Transocean may be taking a similar position to Noble that Anadarko could use the rig elsewhere in its operations.
Additionally, since Anadarko has invoked the force majeure clause for the second Transocean contract not scheduled to expire until 2013 -- well beyond the current federal ban on offshore drilling -- Transocean could make the argument that Anadarko is attempting to take advantage of the BP oil spill to renegotiate better rates with drillers, as opposed to being forced by an extraordinary event to pull out of the deal.
The force majeure clause has been widely expected to be the legal means used by some oil and gas companies to renege on existing contracts of offshore drillers like Transocean. However, some executives at the big oil firms, such
CEO Rex Tillerson, have said that a rush to nullify contracts with drilling partners may not be in the long-term interest of the oil sector.
A Transocean spokesman, Guy Cantwell, said the company won't provide any further details on its discussions with Anadarko beyond the regulatory filing. The regulatory filing indicated that Transocean refutes Anadarko's claim that a force majeure event exists in the Gulf of Mexico due to the federal moratorium on drilling.
Anadarko spokesman John Christiansen wrote in an email to
, "We believe our notification of force majeure was appropriate pursuant to our rights under the drilling contract due to the deepwater drilling moratorium and the Gulf of Mexico-specific nature of the contract, and we will continue to exercise all remedies we have under our drilling contract with Transocean."
-- Reported by Eric Rosenbaum in New York.
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