Petromec Inc & Anor v Petroleo Brasileiro SA & Ors [2011] EWHC 2997 (Comm) (17 November 2011)

Petromec Inc & Anor v Petroleo Brasileiro SA & Ors [2011] EWHC 2997 (Comm) (17 November 2011)

The compression deviation operates as a cost allocation provision: Petromec is only obliged to supply one new 2 million m³/d compressor and the existing compressor; all costs of acquiring, installing, and accommodating further compression systems to meet Petrobras's requirements are for Petrobras's account. For risers, Petromec could reasonably use the central caisson for attachment and was not obliged to install a spider deck; attachment to a spider deck was outside the scope of the Original Specification.

Citation
[2011] EWHC 2997 (Comm)
Parties
Claimant: Petromec Inc; Defendant/part 20 Claimant: Petroleo Brasileiro S. A. Petrobras; Defendant/part 20 Claimant: Braspetro Oil Services Company; Part 20 Defendant: Petro-Deep Inc.; Part 20 Defendant: MaritimaPetroleo E Engenharia Ltda
Jurisdiction
England and Wales
Judgment Date
17 November 2011
Procedural Posture
Commercial Court Claim / Judgment on Preliminary Issues
Outcome
Judgment for Petromec on Issues 1 and 3
Legal Topics
Contractual Interpretation, Cost Allocation, Variation Orders, Oil and Gas Upgrades
Contract Law Commercial Law Contractual Interpretation Cost Allocation Variation Orders Oil and Gas Upgrades

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Parties

Petromec Inc

Claimant

Petroleo Brasileiro S. A. Petrobras

Defendant/part 20 Claimant

Braspetro Oil Services Company

Defendant/part 20 Claimant

Petro-Deep Inc.

Part 20 Defendant

MaritimaPetroleo E Engenharia Ltda

Part 20 Defendant

Procedural Posture

Commercial Court Claim / Judgment on Preliminary Issues

Legal Issues

  1. 1 Interpretation of compression deviation in contract
  2. 2 Interpretation of riser deviation in contract
  3. 3 Allocation of upgrade costs under clause 12.1

Ratio Decidendi

The compression deviation operates as a cost allocation provision: Petromec is only obliged to supply one new 2 million m³/d compressor and the existing compressor; all costs of acquiring, installing, and accommodating further compression systems to meet Petrobras's requirements are for Petrobras's account. For risers, Petromec could reasonably use the central caisson for attachment and was not obliged to install a spider deck; attachment to a spider deck was outside the scope of the Original Specification.

Court Disposition

Judgment for Petromec on Issues 1 and 3

Orders

  • Petromec's obligation for gas compression is limited to supplying one new 2 million m³/d compressor and the existing compressor; Petrobras to bear costs for additional compression systems.
  • Petromec may use the central caisson for riser attachment and is not obliged to install a spider deck.