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Crude Oil Gathering Centre Project, Middle East

Facts

Client: Oil and gas contractor

Country: Middle East

Industry: Oil & Gas – downstream – oil field gathering centre

Issues

Our client was the main contractor on a USD650 million contract for the construction of an oil field gathering centre at Sabriyah field in Kuwait. Issues arose as to the correct interpretation of certain key clauses relating to currency and commodity price fluctuations. The outcome of the dispute had very substantial implications for the overall price payable for the project.

Fenwick Elliott also advised in connection with local legal proceedings initiated by a major subcontractor against our client.

Solutions

Fenwick Elliott has extensive experience of advising in connection with projects which are governed by the law of the Arab Gulf States and we are familiar with the issues which commonly arise under the Gulf State Civil Codes on major projects. We also have an extensive network of local counsel with whom we have worked previously and whose legal advice we trust.

By calling upon our own extensive experience of payment and price adjustment clauses internationally and on high quality local legal advice, we were able to provide clear and definitive advice to our client as to the interpretation of the relevant clauses. Based upon our advice, our client was able to negotiate a highly satisfactory outcome.

We also worked with our client to defend the claims being made against them by a major subcontractor under local law, including advising on prospects, preparing a defensive position and advising on staying local Court proceedings to arbitration in accordance with the subcontract. Our client was able to achieve a negotiated settlement at an early stage.

Benefits

By combining our international experience of major projects with good quality local legal advice, we were able to offer our client the ‘best of both worlds’. With our legal support, our client was able to achieve favourable outcome with minimal disruption to the project. The project was subsequently completed 6 months ahead of schedule.