There are several standard forms contracts for physical (rather than fictitious) gas sales that can guide and streamline the parties in choosing the terms Should I continue to support delivery under transport, processing and sales contracts? Most oil and gas leases have savings clauses that can prevent the expiration of the lease if production is interrupted for mechanical reasons, lack of market or temporary non-profitability. In certain circumstances, clauses such as blocking clauses, « workover » clauses and continuous development clauses may retain a lease, joint operating contract or other production-related contract during non-production. In the context of drilling obligations, a comprehensive view of the contract can help to understand what obligations may be excused or modified by other remedies in the event of non-performance of the contract. A careful analysis of penalties for early termination in drilling contracts should be conducted to determine whether these sanctions can be applied or implemented. Although leases may expire when production becomes unprofitable, the operator`s reasonable standard may apply and allow the lease to be valid. The global pandemic of COVID 19 and the fall in oil and gas prices have put an end to the economic and economic uncertainty of the tense oil and gas industry. Recently, China`s major importers of natural gas and liquefied natural gas (LNG) have declared force majeure in response to the market disruption associated with COVID-19, in order to ease and excuse their contractual obligations. The major suppliers dispute these allegations of force majeure. China is the world`s largest importer of gas and LNG, and resolving these disputes could be important to the oil and gas industry internationally. It remains to be seen whether these declarations of force majeure will withstand legal scrutiny. The consequences of suspending supplier contracts could have a significant impact on the upstream sector of the oil and gas industry. This warning briefly outlines the issue of force majeure for U.S. offshore oil and gas contracts, why there is no one-way approach, the first critical steps to maintain force majeure rights for upstream contracts in the United States, covid-19 considerations, and alternative force majeure remedies that may apply to U.S.
oil and gas development. The robust oil and gas team at K-L Gates is ready to work with our customers to review and plan for disruptions caused by the current pandemic. The Gorek, Larak and Bakong fields are among the discoveries made by SapuraOMV during their 2014 drilling campaign and are designed as three separate drilling rigs for resale to the PETRONAS LNG COMPLEX. As noted above, a force majeure clause is generally governed by contract law. In many legal systems, the interpretation of a force majeure clause is governed by the four corners of the treaty.