ROYAL DUTCH UNITS JOIN LNG TANKER BATTLE

April 16, 1990
Four Royal Dutch/Shell Group companies have started legal proceedings to prevent the U.S. Maritime Administration from selling three LNG tankers the group claims are subject to an exclusive option between Marad and Shell. The Shell action, in the District of Columbia federal court, coincides with rejection of a claim by Argent Marine Cos. against Marad's decision to end an agreement to sell the vessels to Argent. Argent also is challenging Marad's decision in the District of Columbia

Four Royal Dutch/Shell Group companies have started legal proceedings to prevent the U.S. Maritime Administration from selling three LNG tankers the group claims are subject to an exclusive option between Marad and Shell.

The Shell action, in the District of Columbia federal court, coincides with rejection of a claim by Argent Marine Cos. against Marad's decision to end an agreement to sell the vessels to Argent.

Argent also is challenging Marad's decision in the District of Columbia federal appeals court (OGJ, Apr. 2, Newsletter).

After negotiations among Shell, Argent, and Marad, three Argent subsidiaries acquired options from Marad to purchase the three vessels and time charter them to Shell companies.

At the beginning of last month, Marad ruled that Argent failed to maintain its U.S. citizenship following signature of the purchase option, which allegedly placed Argent in breach of the agreements. Marad said termination of the agreements effective Apr. 5 left it free to sell the vessels.

The four Shell companies involved in legal proceedings are Shell International Marine Ltd., Shell International Gas Ltd., Shell Gas Nigeria BV, and Shell Bermuda (Overseas) Ltd., which signed the charter option with Argent.

In the proceedings, the companies claim Shell has an exclusive option until Aug. 15, 1991, to buy the vessels by a U.S. citizen nominee of Shell, and Argent was validly nominated as the U.S. citizen purchaser.

Shell also claims that even if Argent was not validly nominated, Shell has the right until Aug. 15, 1991, to nominate an alternative U.S. citizen purchaser.

Shell describes Marad's Mar. 5 decision that Argent was in breach of the purchase option agreements as arbitrary, capricious, and erroneous as a matter of law.

Two of the LNG vessels--Arzew and Southern--would be used by Shell to supply Algerian LNG under long term contracts to the Cove Point, Md., terminal. Gamma will be used by an affiliate of Nigeria LNG Ltd. to supply the U.S. East Coast with Nigerian LNG.

Shell believes denial of access to the vessels under the terms of the present agreements will jeopardize or, at the very least, delay the growth of LNG supplies to the U.S.

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