Total Rejects Force Majeure Notice From Chinese LNG Buyer
French oil major Total has rejected a force majeure notice from a buyer of liquefied natural gas (LNG) in China, a Total executive said during the company's full-year results presentation on Thursday.
"Some Chinese customers, at least one, are trying to use the coronavirus to say I have force majeure," said Philippe Sauquet, head of Total's gas, renewables and power segment.
"We have received one force majeure that we have rejected."
A Chinese international trade promotion agency said last week it would offer force majeure certificates to companies struggling with the fallout from the coronavirus epidemic to give to their overseas partners.
China National Offshore Oil Corporation (CNOOC), the country's biggest importer of liquefied natural gas (LNG), has suspended contracts with at least three suppliers because of the rapid spread of the coronavirus, two sources said on Thursday.
The biggest suppliers of LNG to CNOOC include Total, industry sources said.
Sauquet did not disclose the name of the buyer Total rejected a force majeure notice from.
"Of course, we must be careful," he said. "If there is a real quarantine in all the loading ports and unloading ports in China, we'll have a real case for force majeure. For the time being, this is not the case."
Companies invoke force majeure when they cannot meet their contractual obligations because of circumstances beyond their control.
Sauquet added that the warmer-than-usual winter has resulted in decreased demand in China this year and low spot LNG prices.
"There is a strong temptation from some long-term customers to try to play with the force majeure concept," he said. "To say I cannot take my cargo under the long-term contract, but I would like to buy spot is contradictory."
(Reporting by Bate Felix in ABERDEEN, writing by Ekaterina Kravtsova in LONDON Editing by Keith Weir and Barbara Lewis)