A pair of the North Sea’s largest oil and gas operators have gone to court over a contract spat brought on by European sanctions against Russia.
Harbour Energy (LON: HBR) and Shell (LON: SHEL) have been locked in dispute for more than a year over the sale of oil from the Clair and Schiehallion fields in the West of Shetland to Shell’s trading arm.
First agreed in 2019, the deal has a price calculation which is partly based on the value of Urals Crude, the main grade of oil exported from Russia.
However that broke down in 2022 when Russia invaded Ukraine, prompting international sanctions.
Shell and Harbour Energy had to appoint a referee to come up with a new calculation based on an alternative fuel source, and each accused the other in the English High Court of trying to influence the referee’s powers for their own benefit in creating a new deal.
Judge Nigel Cooper KC said the pair are “sophisticated commercial operators” and didn’t give any guidance to the referee save one concession, as requested by Harbour, that the scope of the referee’s powers were as set out in the original contract.
Otherwise, he said there is “no evidence” to suggest the referee would apply his powers too widely or narrowly, as the pair suggest, and giving another ruling would create “danger” of inadvertently restricting the new deal being determined.
Shell and Harbour Energy have appointed a referee via the London Court of International Arbitration and are now taking next steps.
A Harbour Energy spokesperson said: “We were pleased that the court granted judgment in our favour on this issue and we look forward to fully resolving this matter as soon as possible.”
Shell declined to comment.
Harbour owns a 7.5% stake in Clair, the largest accumulation of oi land gas in Western Europe, and 10% in Schiehallion – both of which are operated by BP which is not part of the dispute.
The London-listed independent has grown to become the largest producer in the UK sector through a spate of deals with Shell, ConocoPhillips and the reverse takeover of Premier Oil.
Last month the firm unveiled a $11.2bn deal which will see it acquire most of the global portfolio of Germany’s Wintershall DEA.
