It’s oil giant vs. oil giant: Marathon Petroleum is suing BP, alleging they breached a contract signed in 2012. Marathon purchased a Texas City oil refinery and three product terminals from BP, who signed a contract wherein they agreed to be responsible for the continue maintenance on the refinery until Marathon took it over. Marathon claims BP did not maintain the facility, and as a result, both the refinery and the terminals are violating several environmental regulations.
The oil refinery was the site of a 2005 explosion that killed 15 people and injured nearly 200 more. Over the next seven years, BP received fines from OSHA totaling $84.6 million for their failure to cooperate with various safety rules following the investigations into the explosion.
In 2010, BP began a project to process safety information for nearly 3,800 pressure vessels in the refinery, but seemed to stop all work on the project after documenting only 555 pressure vessels. The oil conglomerate is also being accused of avoiding basic maintenance and repairs on the equipment and facilities, resulting in neglect of many industry safety regulations. Lastly, BP had been planning a complete overhaul of an aromatics recovery unit before the sale, but after the sale was complete, they abandoned these plans.
On top of the purchases, the two companies had negotiated a fuel station services agreement (FSSA,) where BP agreed to provide certain services to Marathon retail establishments. In the FSSA, Marathon agreed to pay BP $6 million for the first three contract years and then $1.5 million for each quarter of the fourth contract year. Marathon has since sent a letter to BP requesting termination of this contract, citing a section that stated termination could be pursued “if the number of retail locations falls to zero“.
BP’s attorney views Marathon’s request as an attempt to reopen negotiations on the contract wherein they had purchased the oil refinery. In response to the termination letter, BP said Marathon’s reaction was premature, and continued to send invoices for the contract year fees, even after the number of fuel stations they serviced did fall to zero.
In light of the breach of contract accusation, Marathon is seeking damages plus interest and attorney’s fees.
Business often find themselves in disputes over contracts. These disputes can be extremely complex, requiring careful, detailed litigation in order to reach a solution. If you find that a business you contracted with has breached the terms of the contract, you may want to ask a seasoned attorney to review your matter. A business attorney who has negotiated various contract breaches either in court or through settlement agreements outside of the courtroom can advise you on how to move forward with your case.
Garcia-Martin & Martin, P.C., is a business and employment law firm in Sugar Land, Texas. Our attorneys have extensive experience in business litigation matters such as contract breaches; in the past, we have represented Fortune 500 companies in high profile cases. We have helped numerous clients in the Houston metro area; we may be able to help with your matter, too.
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