Hess Corporation v. Eni Petroleum U.S., LLC, et al.

Eni Petroleum (defendant) was a natural-gas producer. Eni reached an agreement with Hess Corporation (plaintiff) to sell gas to Hess. The agreement did not specify a particular source of the gas Eni would sell, or who would transport it. Shortly after the parties reached the agreement, a leak was discovered in the pipeline that Eni used to transport its gas. As a result, the operator of the pipeline stopped all transportation through the pipeline. Because of the leak, Eni could not get any of its gas to the specified delivery point until the operator repaired the pipe. Upon learning of the leak, Eni notified Hess that it was declaring force majeure under the agreement and would not be delivering gas to Hess. The force majeure terms of the agreement stated that neither party would be liable for failure to perform by any cause not reasonably within the control of the parties, including interruption of transportation. Hess rejected Eni’s declaration of force majeure, pointing out that the delivery point was fed by a number of different sources. Therefore, according to Hess, the leak in the pipeline did not affect the availability of natural gas at the delivery point. Hess also noted that the agreement did not identify the operator or that pipeline as the specific transporter. Hess was forced to purchase gas from another buyer at a significantly marked-up cost. Hess filed a breach of contract action against Eni. The trial judge found Eni liable for Hess’s damages. The judge held that the absence of a listed transporter was critical to his decision. Because nothing in the agreement stated that Eni would be able to provide gas through only a specific transporter using a specific route, the leak did not constitute a force majeure event. Eni appealed, arguing that the judge erred in rejecting its force majeure defense.