Ex-oil traders win partial victory over BP in Canada dispute

Thu Sep 1, 2016 5:58pm EDT
 
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By Jarrett Renshaw

NEW YORK (Reuters) - A team of former Wall Street oil traders have won a partial victory in their continuing legal dispute with oil major BP PLC over how to properly run a remote eastern Canadian refinery, according to court documents filed Thursday.

The legal fight, first reported by Reuters in March, stems from allegations leveled by BP that equity-backed NARL Refining violated its crude and product supply agreement when the refiner failed to maximize yields at the 115,000 barrel-per-day refinery in Come by Chance, Newfoundland.

Among other things, BP alleged that NARL ran the refinery at high rates when it was not economical, in order to exploit a unique clause in their contract that allowed NARL to earn a higher profit on oil refined in excess of 90,000 barrels.

The arbitration panel ruled late in August that NARL had no contractual obligation to run the refinery to the mutual benefit of both parties and tossed out that part of BP’s allegations.

“There are no words of any kind requiring to maximize refinery margins for the benefit of BP,” the ruling says of the refiner, which is operated by SilverPeak Financial Partners, formed by a group of Wall Street veterans.

However, the panel agreed to move forward with BP’s other allegation that NARL failed to provide required information, such as economic models, and to discuss possible crude slates, court documents show. Without that information, BP could not evaluate whether the refinery was running optimally.

Geoff Morrell, a senior vice president of U.S. communications and external affairs at BP, said the arbitration process has a long way to go and the company is confident that it will prevail on the remaining issues.

NARL declined comment.   Continued...

 
A BP logo is seen at a petrol station in London, Britain January 15, 2015.   REUTERS/Luke MacGregor/File Photo