U.S. Tells Chinese Propane Buyer That Broke Contract to Pay Up
- Mabanaft wins big $523.8 million reward from Oriental Energy
- Saudi Arabia, Qatar and Iran to benefit from trade spat
While the Chinese government threatens a 25 percent tariff on propane imports from the U.S., an American court is ordering retribution for a breach of contract to buy the heating fuel that’s a key ingredient in making plastics.
German-owned Mabanaft Pte. Ltd. will collect $523.8 million in damages from Oriental Energy Co. Ltd. after the latter tried to back out of a six-year agreement to buy U.S. propane from the Houston Ship Channel. The contract was inked in 2013, when propane exports from the U.S. were in the nascent stage and economics for Asia still looked promising. By mid-2016, the arbitrage shut, and foreign buyers opted to pay multimillion-dollar cancellation fees in lieu of picking up their cargo. Oriental Energy tried to renegotiate the pre-agreed price terms as the global economics changed, but Mabanaft declined.