November 22, 2019 / 6:47 PM / 23 days ago

Valero points a finger at Trafigura as source of bad marine fuel: court documents

HOUSTON (Reuters) - U.S. refiner Valero Energy Corp said in court documents that Swiss commodities trader Trafigura AG was its supplier of tainted marine fuel that damaged customers’ engines in 2018, asking a judge to hold the trader liable for losses.

Trafigura logo is pictured in the company entrance in Geneva, Switzerland March 11, 2012. REUTERS/Denis Balibouse/File Photo

Valero’s amended suit, filed last month in U.S. district court in Houston, alleges breach of contract and negligence, asking for unspecified damages. Trafigura supplied it with more than 186,000 barrels of fuel oil containing 4-Cumyl-Phenol, Valero said, and it supplied the oil to shippers. The substance is used in making epoxy.

Trafigura on Friday declined to comment. Its attorneys did not reply to requests for comment.

Valero was unaware at the time of its fuel sales that “there were any concerns with the material supplied by Trafigura,” spokeswoman Lillian Riojas said on Friday, declining other comment.

Trafigura has asked a U.S. district court in Houston to dismiss it from the case, or transfer the suits out of Texas. The judge has not yet ruled on the request or on Valero’s motion to have existing complaints against it transferred to Trafigura.

Valero has not determined that the 4-Cumyl-Phenol in the marine fuel was the substance that fouled its customers’ engines, its attorney, Keith Letourneau, said in June in a court hearing.

“If it comes out that is the contaminant, then that’s the source of the contamination, in our view. And so that’s why we brought Trafigura in,” Letourneau told a court hearing.

National Shipping Co of Saudi Arabia sued Valero and Trafigura, saying it paid more than $1.1 million for repairs and replacement fuel for a ship that drifted at sea for two days before repairs allowed it to continue, according to a complaint filed against the two firms in Houston.

Chemical company Indelpro SA, which filed its own suit against the two fuel suppliers, said in court documents that Valero Marketing and Supply knew that there were problems with the bunker fuel that affected more than 150 ships between Jan. 1 and May 31, 2018.

“There are about 80 other vessels that we know about that have directly gotten fuel from Valero here in the Houston area and through intermediaries,” James Power, an attorney for Indelpro, told the court in June. Overall there have been 200 vessels that were affected by tainted fuel, he said.

Reporting by Erwin Seba; Editing by Steve Orlofsky

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