Exclusive: Freeport LNG retracts force majeure, widening losses for gas buyers - sources

By Julia Payne and Marwa Rashad - Yesterday

 An LNG tanker is tugged towards a thermal power station in Futtsu

LONDON (Reuters) - Top U.S. gas exporter, Freeport LNG, has retracted the force majeure it initially declared after an explosion in June, a development that could cost its buyers billions of dollars in losses, a document showed and three trading sources said.

Force majeure is a notice used to describe events outside a company's control, such as a natural disaster, which usually releases it from contractual obligation without penalty.

The force majeure would also have allowed Freeport’s LNG buyers to exit their own agreements to deliver gas to end users. Instead, they are facing a collective loss of up to $8 billion as they source alternative supplies at elevated spot market prices, according to the trading sources, who have knowledge of the matter, and calculations by a consultancy.

Those buyers include BP, TotalEnergies, Osaka Gas, Japan’s top power generator JERA and South Korea’s SK Gas Trading and trading house Trafigura that holds a small contract.

Freeport and the buyers declined to comment on the force majeure, its retraction and potential losses.

Freeport accounts for 20% of U.S. LNG exports but stopped shipments after the explosion on June 8, causing a spike in global gas prices which had already soared on falling Russian supplies to Europe and other outages.

Freeport declared force majeure on June 9, before retracting the notice around the end of June, two of the three sources with knowledge of the matter said, adding that Freeport blamed human error.

"No facts have been revealed that would indicate that the incident was a result of Force Majeure," Freeport told market participants on Aug. 3 in a notice seen by Reuters.

Neither the retraction nor the notice has been previously reported.

Related video: OPEC and its allies agree to raise output by 100,000 barrels per day from September (CNBC)   View on Watch

Freeport does not expect full operations to resume until the end of the year, although a partial restart is scheduled for October. Without the force majeure, the company needs to pay compensation to its gas buyers and the buyers still need to supply end users.

The outage leaves a hole of about 80 cargoes based on an October restart date, according to Reuters calculations and an LNG consultancy, although Freeport's buyers may not need to replace them all depending on how they negotiate their onward contracts.

The buyers had paid Freeport around $30-$50 million per LNG cargo, according to two of the sources, with the fuel then sold to end users at a premium usually amounting to a few millions of dollars per cargo.

Freeport's buyers would have to pay $100 million per cargo based on Wednesday's spot market prices to replace the lost volumes as LNG prices have doubled since the explosion, which happened when markets were already tight.

However, Freeport is offering buyers compensation of around 10% of the value of the purchased and undelivered cargoes or lump sums of between $3 million-$5 million per cargo, according to the two sources.

"There are ongoing discussions taking place right now with Freeport as the compensation they are offering will not cover taking a spot cargo at today's rates," one of the sources said.

Freeport declined to comment on its compensation policy.

"The potential losses Freeport's offtakers may face... will probably be within the range of about $6-$8 billion, on a collective basis," said Tamir Druz, managing director at Capra Energy, an LNG consultancy.

“While some of these cargoes may not need to be replaced, on a mark-to-market basis, it remains a significant loss.”

Oil major BP has the largest contract at 4.4 million tonnes per annum (mtpa) through 2040. JERA and Osaka Gas have contracts at 2.3 mtpa each through 2039, while SK and TotalEnergies each have 2.2 mtpa contracts running through 2040, according to the International Group of Liquefied Natural Gas Importers.

Based on Freeport paying 10% compensation per lost cargo, losses may amount to about $2.3 billion for BP and $1.1 billion for TotalEnergies on a mark-to-market basis, Capra Energy's Druz said.

BP and TotalEnergies declined to comment on any losses.

Mark-to-market is a way of measuring the fair value of accounts based on current market prices, which is likely different to the price paid to acquire them.

Osaka Gas sharply cut its annual net profit forecast this month citing a nearly 80 billion yen ($611 million) hit from the Freeport outage for the second quarter alone.

(Reporting by Julia Payne and Marwa Rashad; Editing by Kirsten Donovan)

 

Lukoil Declares Force Majeure at Huge Iraqi Oilfield After U.S. Sanctions

By Charles Kennedy - Nov 10, 2025

Russian oil giant Lukoil has declared force majeure at the 400,000-barrels-per-day West Qurna-2 oilfield in Iraq after the U.S. sanctions on Russia’s top oil firms, sources familiar with the matter told Reuters on Monday. 

Following the October 22 U.S. sanctions on Lukoil and Rosneft, Iraq has stopped all cash and crude payments to Lukoil, according to Reuters’ sources. 

Last week, reports emerged that Iraq’s state oil marketing company SOMO had canceled three crude loadings from Lukoil this month after the U.S. sanctioned the second-biggest Russian oil producer last month. 

The three loadings from Lukoil from its production at West Qurna-2 were scheduled for November 11, 18, and 26, but Iraq apparently doesn’t want to handle the now-sanctioned barrels, market sources told Reuters last week. 

Lukoil has a 75% equity stake in Iraq’s giant West Qurna-2 oilfield, which produces more than 400,000 barrels per day (bpd) of crude oil.

Following the U.S. sanctions on Lukoil and Rosneft, oil traders and operators globally are steering clear of any cargoes of the two biggest Russian oil firms to avoid drawing the attention of the Trump Administration and being slapped with secondary sanctions.

After the U.S. sanctions on Lukoil and Rosneft, “as a result of Russia’s lack of serious commitment to a peace process to end the war in Ukraine,” Lukoil announced it would sell all of its international assets, and reached a preliminary agreement with Switzerland-based commodity trader Gunvor to sell these.

However, Gunvor last week pulled the $22-billion bid for Lukoil’s international business after the U.S. Treasury Department signaled it was not happy with the deal, calling the company a Russian “puppet”. 

“President Trump has been clear that the war must end immediately. As long as Putin continues the senseless killings, the Kremlin’s puppet, Gunvor, will never get a license to operate and profit,” the U.S. Treasury said in an X post.

With no immediate deal for Lukoil to sell international assets, West Qurna-2 being one of the biggest, the near-term production and supply from the giant Iraqi oilfield looks increasingly uncertain.  

By Charles Kennedy for Oilprice.com 

Force majeure refers to extraordinary events or circumstances beyond the control of the parties involved in a 

contract, which can prevent them from fulfilling their contractual obligations.

Definition and Origin

Force majeure is a French term that translates to "superior force." In legal contexts, it describes events that are 

unforeseen and unavoidable, such as natural disasters (earthquakes, floods), wars, riots, or pandemics. The concept is rooted in civil law and is commonly included in contracts to protect parties from liability when such events disrupt the expected course of events. 

Sanctions Force Lukoil Into Force Majeure at Giant Iraqi Oilfield

Iraqi officials had reportedly blocked three Lukoil export loadings at Iraqi terminals, among other measures (USN file image)

Published Nov 10, 2025 5:39 PM by The Maritime Executive

 

American sanctions on Russian oil giant Lukoil have forced the company to declare force majeure for its Iraqi operations, taking nearly 10 percent of the nation's entire production offline through the closure of the giant West Qurna-2 oilfield, according to local and international media sources. The move follows the Iraqi government's decision to cancel payments and export loadings for Lukoil over sanctions concerns. 

West Qurna-2 is a supergiant 12.9 billion barrel reservoir near the port of Basra, Iraq. It was developed by Lukoil and Statoil (now Equinor) in the 2010s, and currently produces about 480,000 bpd of crude. It is part of the braoder West Qurna Field, one of the largest oilfields in the world (by total recoverable barrels). 

Lukoil owns 75 percent of West Qurna-2, and it is the firm's most valuable foreign asset. It had planned to invest billions of dollars to increase the field's output in the years ahead, but given Iraq's strict application of U.S. sanctions on the Russian firm, those plans appear off the table unless there is a change in regulatory circumstances. Iraq has cut off cash payments and in-kind oil allocations to Lukoil, and has reportedly canceled three of the firm's export loadings for the month of November. Lukoil has also reportedly had to lay off its international staff at the West Qurna-2 field, though it has been able to retain its Russian and Iraqi workforce. 
  
If the sanctions situation does not change, local officials told Reuters that Lukoil could exit the field entirely within six months. If the company seeks a buyer for its Iraqi holdings, any would-be purchaser could encounter U.S. compliance difficulties: Russian-linked commodity trader Gunvor was in talks to buy all of Lukoil's international holdings, including West Qurna-2, but backed out after threats of sanctions from the U.S. Treasury Department. 

If Lukoil exits the West Qurna-2 field without selling its rights to a successor, it could clear the way for a Western operator to step in, according to Oilprice.com. American, British and French oil majors might all take an interest in West Qurna-2's abundant reserves. 

In the meantime, the force majeure declaration will lower Iraq's oil production by about 480,000 barrels per day, about 0.5 percent of the global oil market. Brent futures were largely unaffected, closing at $64 per barrel. 

Keystone Force Majeure Cuts Oil Flows To U.S.

By Tsvetana Paraskova - Jul 19, 2022,

• TC Energy, the operator of the Keystone Pipeline, declared force majeure on Monday.
• The operator cited a power outage in South Dakota as the main reason for the force majeure status.
• The company did not provide a timeline for restoring crude flows to full capacity.

TC Energy, the operator of the Keystone Pipeline, declared force majeure on Monday following a power outage in South Dakota, which reduced the flows on the link carrying crude from Canada to the U.S.

TC Energy said in a statement late on Monday that it was made aware of a non-operational incident resulting from third-party damage to the power supply to a facility on the Keystone Pipeline System near Huron, South Dakota. The system continues to operate safely, but it is operating at a reduced rate due to damage to the third-party power utility.

“Initial damage assessments have been completed with no material impact to TC Energy owned facilities,” the company said.

As a result of the power outage, TC Energy declared force majeure on the Keystone Pipeline, but did not provide a timeline for restoring crude flows to full capacity.   

“Repairs are being undertaken and we are working to restore full service as soon as possible. A timeline for full-service restoration is not available at this time,” the company said.

The 2,687-mile Keystone Pipeline System plays a key role in connecting Alberta’s crude oil supplies to U.S. refining markets in Illinois, Oklahoma, and Texas, as well as connecting U.S. crude oil supplies from the Cushing, Oklahoma, hub to refining markets in the U.S. Gulf Coast through the Marketlink Pipeline System.

The reduced flows of crude from Canada to the United States comes days after U.S. President Joe Biden returned from his trip to the Middle Eastern without receiving a specific commitment from the top OPEC producers to boost oil supply in the near term.

Meanwhile, gasoline prices in the U.S. continued to fall for a fifth consecutive week, to a national average of $4.51 per gallon as of July 18, according to data compiled by fuel-savings app GasBuddy. 

“Barring major hurricanes, outages or unexpected disruptions, I forecast the national average to fall to $3.99/gal by mid-August,” said Patrick De Haan, head of petroleum analysis at GasBuddy.

In the past three days, South Carolina and Texas became the first two states to see state average gasoline prices return to below $4 per gallon, according to GasBuddy.

By Tsvetana Paraskova for Oilprice.com

Ecuador Calls Force Majeure On Almost All Of Its Oil Production

By Julianne Geiger - Feb 24, 2023, 2:30 PM CST

Ecuador's oil production is expected to be offline for at least three weeks, the country's government said on Friday after declaring a force majeure on Thursday. 

Ecuador announced the force majeure for its oil industry following a Marker River bridge collapse that triggered a closure of crude oil and gas pipelines. Petroecuador and pipeline operator OCP Ecuador suspended pipelines on Wednesday after the bridge collapsed.

On Thursday, Petroecuador said it would gradually shut oil wells, estimating that it would be seven days before pumping would begin to restart.

"By virtue of the force majeure, occasioned by the collapse of a bridge on the Marker River due to heavy seasonal rains, force majeure is declared for operators of exploration and exploitation of hydrocarbons which have been affected by hydrocarbon transport through the SOTE, OCP and Shushufindi Quito polyduct systems and the impossibility they have of receiving and transporting crude oil," Ecuador's Ministry said on Thursday.

But the country's oil production is looking like it will be out for longer.

On Friday, Energy Minister Fernando Santos said, "Turning off wells is simple, but restarting them is a bit complicated, we're talking about maybe some three weeks."

Ecuador routinely has trouble with its SOT and OCP pipelines that create stoppages due to tubing damage from rocks and landslides.

Ecuador's economy heavily depends on oil production and exports, with government data showing that oil accounted for one-third of the country's oil exports, and World Bank data suggesting that oil rents were responsible for 7% of its gross domestic product.

Ecuadorian President Lasso said that the country would strive to double its oil production by the end of his term in 2025, which would mean a total of nearly a million barrels per day.

State-controlled Petroecuador is responsible for 80% of the country's oil output.

By Julianne Geiger for Oilprice.com

Canada's Syncrude oil sands facility declares force majeure after fire: sources

By Devika Krishna Kumar and Rod Nickel Reuters March 6, 2020

A tailings pond near the Syncrude tar sands operations near Fort McMurray

NEW YORK (Reuters) - Canada's Syncrude oil sands facility has declared force majeure after a fire on Sunday at the plant and told customers it will reduce production by about 20%, sources familiar with the matter said.

Syncrude is a joint venture majority-owned by Suncor Energy Inc, with minority stakes held by Imperial Oil Ltd and others. The facility upgrades thick bitumen to light oil.

Canada is the world's fourth-largest oil producer and Syncrude's nameplate capacity of up to 360,000 barrels per day (bpd) represents about 10 percent of the country’s supply.

The fire happened on Sunday in one of Syncrude's hydroprocessing units at its Mildred Lake, Alberta, upgrading facility, spokesman Will Gibson said. He said the building was empty at the time of the fire, and its cause is unknown.

No one was injured, he said.

Gibson declined to comment on the production impact.

Force majeure is a declaration that unforeseeable circumstances prevented a party from fulfilling a contract.

"We're working with the operator, Syncrude, to better understand the situation," Suncor spokeswoman Sneh Seetal said.

Canadian oil prices strengthened due to the production cuts, with light synthetic crude for March delivery flipping from a discount to trade at a premium of $3.50 per barrel over West Texas Intermediate (WTI) on Thursday, market sources said.

Prices for April strengthened to settle at $3.10 over WTI on Thursday, wider than Wednesday's settle of $2.10 over, according to NE2 Canada Inc. The contract traded at $2.90 on Friday.

Syncrude, one of the largest producers of crude oil from Canada's oil sands, has had several operational issues in recent months. In January, the company declared force majeure due to extreme cold weather in western Canada while in December, the company reduced production by 1.6 million barrels due to disruptions.

Earlier last year, Syncrude cut October synthetic crude sales by 1.4 million barrels because planned maintenance at the plant was extended.

Asked about ongoing operational issues at Syncrude, which started operations in 1978, Gibson said the company was focused on being "reliable and responsible."

Brazil’s Citrosuco Threatens Force Majeure on Some Orange Juice Supplies

Dayanne Sousa
Mon, July 24, 2023 


(Bloomberg) -- Brazil’s Citrosuco, one of the world’s top orange juice producers, warned it may need to declare force majeure on supplies to some clients after disease and rainfall damaged crops.

In a July 17 letter sent to clients and seen by Bloomberg, the company said it was being “severely affected” by greening disease and rain that flooded farms. It added it won’t be able to ensure supplies at the volumes and prices previously agreed.

Citrosuco confirmed the contents of the letter, which it said was sent as a warning to some clients who had contracts for delivery earlier this year. In a statement to Bloomberg on Monday, the company added the communication was part of specific commercial negotiations.

While the letter stated “supply performance is currently prevented by force majeure, until further notice,” the company said it had not taken the actual legal step associated with invoking force majeure, a clause companies usually enforce when an unforeseen event, such as a fire or natural disaster, prevents them from complying with a contract.

Citrosuco’s letter is a reminder of just how tight global orange juice markets are. Brazil ships almost four of every five cups of orange juice consumed globally, according to data by the US Department of Agriculture, and Citrosuco is part of a group of three major juice companies — including Sucocitrico Cutrale LTDA and Louis Dreyfus Co. — that is responsible for most exports from the country.

Orange juice futures reached a record high Monday, rising by the exchange limit of 10 cents early in New York trading. Greening disease, which is spread by an infected insect and causes trees to produce unusable fruit, was responsible for decimating Florida’s orange groves.

Bloomberg Businessweek

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France's Total Evacuates Staff, Announces Force Majeure on LNG Project in Mozambique

France's Total Evacuates Staff, Announces Force Majeure on LNG Project in Mozambique

© Sputnik / Alexey Filippov

BUSINESS

10:05 GMT 26.04.2021Get short URL

 

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MOSCOW (Sputnik) - French oil company Total on Monday declared force majeure and the evacuation of all personnel from the Afungi Liquefied Natural Gas (LNG) project in northern Mozambique over terrorism-related security concerns.

"Considering the evolution of the security situation in the north of the Cabo Delgado province in Mozambique, Total confirms the withdrawal of all Mozambique LNG project personnel from the Afungi site. This situation leads Total, as operator of Mozambique LNG project, to declare force majeure", the firm said in a statement.

It also expressed solidarity with the country's government and people and hope that the security and stability in the area would be restored.

Reports on the evacuation of Total's personnel occurred in early April following the halt of operations on the site in late March over the Islamist seizure on the Palma city, also located in the Cabo Deldago province.

Experts believed that the suspension of work on the project could seriously affect Mozambique's future positions in the world LNG market. The country ranks 14th in the world in terms of natural gas reserves.

Last month, the Daesh* terrorist group took over Palma after several days of hostilities, killing an unknown number of people and displacing some 14,000 others. On 2 April, the police of Mozambique told Sputnik that there were no militants in the town any longer.

Mozambique LNG is projected to be the first onshore project in Mozambique. It includes the development of the Golfinho and Atum fields and the construction of a two-line liquefaction plant with a total capacity of 12.9 million tonnes of LNG per annum and an expansion potential of up to 43 million tonnes.

The start of production is scheduled for 2024. Total is the operator of the project with a 26.5 percent share. The cost of the project is estimated at $20 billion, the investment decision regarding it was made in 2019.

*Daesh (also known as ISIS/ISIL/IS) is a terrorist organisation outlawed in Russia and many other states

 

Ecuador’s NOC Declares Force Majeure After Pipeline Leak

By Alex Kimani - Mar 19, 2025, 

Ecuador's state-run oil company, Petroecuador, has declared force majeure at the operations of its SOTE pipeline after a landslide ruptured the pipeline, releasing tens of thousands of barrels of oil. Petroecuador has yet to determine the size of the spill, but has so far removed 225,000 cubic metres of material that collapsed on the pipeline. The company says the force majeure will last up to 60 days in a bid to give it enough time to take all necessary actions to minimise the incident.

Petroecuador added it has enough oil in its inventories to supply the local fuel market; however, it has suspended exports of the Oriente crude due to the force majeure clause. Oriente crude is one of two varieties that the South American country produces.

Ecuador’s last major oil spill occurred in July 2023 when ~1,200 barrels of crude spilled in the Pacific Ocean. The spill occurred after a tank belonging to Petroecuador exceeded its maximum capacity of 188 barrels and spilled into a containment pool at the company’s Esmeraldas maritime terminal. Around four kilometres of coastline were affected by the spill. 

Ecuador is one of South America’s top oil producers. In 2021 Ecuador's production clocked in at 550,000 barrels, the 28th highest in the world. Oil consumption in the country is about 260,000 b/d, with the balance being exported. Ecuador has oil reserves of more than 8 billion barrels, ranking the country as number 19 globally.

In 2023, Ecuadorians voted against drilling for oil in Yasuni National Park, home to the Tagaeri and Taromenani who live in self-isolation. Yasuni, designated a world biosphere reserve by UNESCO in 1989, encompasses a surface area of over 1 million hectares (2.5 million acres); 121 reptiles species, 610 species of birds and 139 amphibian species. Former Ecuadorian President Guillermo Lasso strongly advocated for oil drilling in Yasuni in a bid to boost oil exports. However, the results of the referendum meant that Petroecuador was forced to abandon operations there.

By Alex Kimani for Oilprice.com