New Global Risks Require Rethinking Old Energy Supply Models
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2026年9月16日
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The North American oil, gas, and petrochemical sectors are navigating an unprecedented convergence of legal, regulatory, and commercial pressures driven by geopolitical disruption, shifting trade policy and changes in global energy markets. These pressures include shipping disruptions in Middle Eastern straits that affect the flow of crude, refined products, liquefied natural gas (“LNG”) and chemicals; evolving tariffs and trade policies; the impact of the ongoing Russia-Ukraine conflict on the European and Asian energy markets; and changing Venezuelan crude flows. These disruptions are not only forcing producers to rethink sourcing, supply chains and commercial relationships, but also require counsel to prepare for litigation and regulatory risks that stem from an increasingly complex landscape.
Force Majeure and Contractual Risk
At the forefront of legal concern is the growing use of force majeure and other contract defenses to delay or excuse performance. Disruptions across oil, gas, and chemical supply chains have led companies to declare force majeure and have increased the risk of arbitration and litigation for businesses that depend on these supplies. At the same time, changing market conditions are enhancing the risk associated with key contract terms, including take-or-pay obligations, minimum volume commitments, pricing formulas, and freight costs, that may diverge from the original contract assumptions. Finally, counterparty financial distress and restructuring activity are introducing insolvency and contract termination risk for supply chain participants.
Sanctions and Regulatory Pressures
Sanctions compliance and evolving U.S. trade policy create additional risks, especially for American refiners handling Venezuelan crude. Recent announcements have created opportunities but also require companies to stay compliant and structure contracts according to the changing guidance.
Changes in U.S. LNG trade are also creating new commercial issues. As European and Asian buyers compete for LNG and regional prices change, disputes may arise over where cargoes can be sent, whether they can be redirected, and how contract prices are calculated. Companies that modify facilities to handle different feedstocks may also face new permitting requirements from state and federal regulators.
Rethinking the Traditional Model
Current disruptions to the energy supply chain have shifted the conversation, prompting producers to rethink traditional models.
- Efficiency is no longer the number one priority: Historically, supply chains were built around the lowest-cost feedstocks, world-scale plants, high utilization, and global trade. This approach concentrated production, feedstock sourcing, and logistics around a relatively small number of regions to achieve the lowest landed cost.
- Capacity depends on supply reliability: Having production capacity is of little value if raw materials cannot reach the plant or finished products cannot reach customers. Reliable access to feedstock, transportation, and end markets is important.
- The economics of resilience are changing: Geopolitics, trade policy, sanctions, energy security, and logistics constraints are forcing producers to reevaluate the traditional model. Producers increasingly recognize that the cost of shutting down a plant because feedstock is unavailable can outweigh the incremental cost of maintaining alternative supply.
Winning Strategies for Producers
As producers consider how to reorganize their operations to cope with current and unpredictable challenges in the energy sector, counsel should prepare for different needs from their clients related to the following strategies.
- Diversifying the Feedstock: Beyond diversifying feedstock suppliers, producers are diversifying feedstock itself. For example, flexible ethylene crackers are increasingly designed to process a range of feedstocks.
- Building Asset Resilience: Producers are increasingly looking not just at having multiple feedstock capabilities, but also at feedstock blending, intermediate storage, turndown capacity, and the ability to redirect intermediates.
- Diversifying the Route: Having multiple suppliers offers limited backup if they all depend on the same port, pipeline or canal. Companies are focusing on points of failure by considering alternative ports, pipelines, Atlantic vs. Pacific sourcing, and rail or truck alternatives if practical.
- Inventory as Insurance: Traditionally, inventory was minimized in order to reduce working capital. Today, an optimized inventory buffers against supply chain disruptions. The challenge is balancing the carrying cost of inventory against the potentially much greater cost of production interruptions.
- Commercial Flexibility: A producer can only be as flexible as its contracts allow. Contracts can either enable you or constrain you. Companies therefore need to carefully consider single versus multiple suppliers, minimum purchase obligations, take-or-pay provisions, force majeure provisions, price indices, freight provisions, and other contractual terms that can either provide or restrict flexibility during a disruption.
- Supply Chain Speed and Intelligence: Producers need to identify disruptions early and make decisions quickly, which requires supply chain modeling. Optionality doesn’t matter if you cannot act quickly.
- Stress-Test the Network: Producers can use what-if analysis to stress test the supply network, identify vulnerabilities before a disruption occurs, and evaluate the potential economic consequences. Molecules should be mapped from feedstock through intermediate products to the ultimate customer to identify dependencies, chokepoints and alternative pathways.
- Selective Regionalization: Producers can maintain the cost advantage of global trade while establishing regional supply alternatives.
Each of these strategies addresses part of the challenges that operators need to navigate, but new solutions also introduce novel risks. As operators take steps to respond to a changing world, counsel should be ready to proactively help manage the new risks these strategies introduce.
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2026年9月16日
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