Force majeure claims are generally restricted to natural disasters, war, or the failure of third parties to perform their obligations to the contracting party. Managerial decisions usually cannot be covered by such claims.
BHP has placed the ill-fated Boodarie on care and maintenance while the corporation considers the long-term future of the plant, located near Port Hedland. It ceased production in May after a gas explosion killed one worker and seriously injured three others.
In the meantime, BHP has long-term gas supply commitments with the North West Shelf project – of which it owns one-sixth – that are worth between $600 million and $800 million. Contract prices are not fixed and are indexed against prevailing oil and gas prices.
“It is a take-or-pay gas contract so there are obligations, BHP's Boodarie Iron Vice President Anthony Kirke told Dow Jones newswires.
“It is commercially sensitive but we have to take a certain amount of gas on an annualised basis,” he said.
North West Shelf partner, Woodside Petroleum, told EnergyReview.Net that the contracts were still valid.
“We have a take-or-pay gas sales contract with Boodarie and we don’t expect developments at the plant to affect our revenue,” said Woodside spokesman Tony Johnson.
Kirke said BHP would examine all options for the project – including permanent closure, sale or conversion to produce chemicals.
