Gas field of dreams

Gas field of dreams

An offshore surveying firm, offering geophysical surveys, signed a contract with an oil company for the provision of geophysical surveys and geotechnical surveys over offshore gas fields.

The gas extraction in that field had been interrupted some time before and the oil company was looking to re-start the extraction and further develop the field.

The purpose of the survey was to provide an assessment of the condition of the seabed and fields before the oil company would consider the next steps for the exploitation of the fields (assessment of the remaining gas reserve, reactivation of the platforms, new drilling operations, etc.).

During the provision of the surveys several events occurred, delaying the commencement and completion of the services by approximately 300 days.

The oil company claimed that the delay was caused by the failure of equipment, defective work and non-completion of obligations.

Therefore, some of the delays claimed were not caused by the negligence of the surveyor. For example, some were caused by operational issues with the vessel that had been chartered for the purpose of the survey.

However, some delays were indeed caused by the negligence of the surveyor and/or their subcontractor, such as their failure to ensure the correct equipment was on board the vessel.

The contract itself contained a liquidated damages clause, which capped the surveyor’s liability for delays at 10% of the contract price (which was US$ 1m).

Originally, the claimant viewed all the delays as one event and claimed one cap. However they realised that they were actually entitled to three separate limitation caps under three contracts so the claim as capped increased to US$ 3m.

Eventually the matter was settled at US$ 1.5m.

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