Shell Counters Force Majeure Rumors


Shells finished lubricant business in the United States moved quickly this week to squelch rumors that it had declared force majeure. Several industry sources told Lube Report that the company had filed notice that it was temporarily unable to meet contractual obligations, but a spokeswoman said Thursday that such statements were incorrect.

The company, which does business as SOPUS Products, said it has imposed volume caps in response to disruptions that hurricanes Katrina and Rita have caused to the lubes industry.

SOPUS Products has not declared force majeure, spokeswoman Tricia Elwell Singer said, but has taken preventative measures to help ensure that we maintain product supply to our customers, including capping overall purchase volume in a fair and reasonable manner. These volume caps will help to maintain a steady flow of inventory to our customers.

Shell said its own facilities in the Houston area – a blending plant and two lube distribution centers – avoided damage from Hurricane Rita, reopened Monday and are operating normally. It added, however, that the two hurricanes had unprecedented effects on the industry, causing downtime for base oil and additive plants. The restart and re-supply efforts are being closely monitored and coordinated by a dedicated team to mitigate supply impacts, Singer said.

Shell Marine Products, which operates separately from SOPUS Products, did declare force majeure Sept. 8 because of disruptions in additive supplies. That declaration applied to marine lubricants sold in the United States and to Alexia 50 cylinder lubricant sold in Asia-Pacific and the Persian Gulf.

Companies exercise force majeure provisions of contracts in order to obtainrelief from contractual performance requirements when performance is impossible because of events beyondtheir control.

Related Topics

Market Topics