## Facts

- Hess (buyer) and Eni (seller) entered a NAESB-based natural gas contract consisting of a Base Contract, monthly Transaction Confirmations, and a Special Provisions addendum.
- The Base Contract required Eni to “sell and deliver” gas and Hess to “receive and purchase,” but did not specify any particular gas source, that gas must be Eni-produced, or any exclusive pipeline/transporter.
- Monthly Transaction Confirmations set quantity, price, period, and a fixed delivery point: Tennessee Gas Pipeline “200 Line – Zone L – 500 Leg” (“Tennessee 500”), and selected “Firm” performance.
- The NAESB force majeure clause excused nonperformance only to the extent performance was prevented by events not reasonably within the claiming party’s control, including “interruption of transportation.”
- Eni moved its Gulf of Mexico gas through the Independence Trail pipeline; a leak in March 2008 led the operator to shut down transportation during repairs.
- Eni declared force majeure and stopped deliveries for April 2008 and related periods based on the Independence Trail shutdown.
- Tennessee 500 was supplied by multiple sources and pipelines; gas remained available there despite the Independence Trail outage.
- Hess rejected Eni’s force majeure claim, purchased replacement gas at higher prices, and sued for breach of contract.
- The trial court rejected the force majeure defense and awarded Hess $317,000 in damages, $81,476.87 in prejudgment interest, and $263,024.15 in attorneys’ fees; Eni appealed.

## Issues

1. Whether a leak shutting down the seller’s chosen upstream pipeline constituted force majeure excusing a firm obligation to deliver at a specified delivery point when the contract did not limit performance to that pipeline or to the seller’s own production and gas remained available at the delivery point.
2. Whether the contract and Transaction Confirmations imposed a general obligation to deliver at Tennessee 500 irrespective of the source or transportation route.
3. Whether industry practice or course of dealing could supply a source- or pipeline-specific limitation not stated in the written NAESB contract.

## Decision

- The Appellate Division affirmed the amended final judgment for Hess.
- The court held Eni was not excused under the force majeure clause because the contract was neither supply-specific nor pipeline-specific.
- The Independence Trail interruption did not “prevent” delivery at Tennessee 500 where gas remained available at the delivery point from other sources and Eni could have obtained substitute supplies.
- The damages, prejudgment interest, and contractual attorneys’ fees awards were upheld.

## Legal Principles

- A force majeure clause in a firm NAESB natural gas contract excuses performance only when a qualifying event actually prevents performance at the contract delivery point, not merely when the seller’s preferred supply path becomes unavailable or more costly.
- Where the contract does not expressly limit the seller’s obligation to a particular production source or pipeline, an upstream disruption to the seller’s chosen arrangements does not excuse nonperformance if delivery at the designated point remains feasible through alternative supply or transportation.
- “Interruption of transportation” does not automatically trigger force majeure when alternative means exist to perform the delivery obligation at the agreed point.
- Unstated commercial assumptions, industry practice, or course of dealing cannot override unambiguous contract language allocating the risk of obtaining substitute supplies under a firm delivery commitment.

## Conclusion

The court enforced the parties’ firm, delivery-point-based NAESB contract as written, holding that a disruption to Eni’s chosen pipeline did not constitute force majeure because the contract did not tie performance to that pipeline or to Eni’s production and gas was still obtainable at the delivery point; Eni therefore remained liable for cover damages, interest, and attorneys’ fees.


Hess Corp. v. Eni Petroleum U.S., LLC, 435 N.J. Super. 39 (App. Div. 2014)