BB Energy has lost a bid to block the sale of three cargoes of South Sudanese oil worth around US$180mn to rival traders, a setback in its bid to recover substantial losses from a pre-payment loan it provided to the cash-strapped country.
The London-headquartered commodities firm had turned to a London court to prevent three cargoes, including one due to be lifted this week, from being delivered to Dubai-based traders BGN and A&M International.
BB Energy claimed it is owed the shipments under a 2025 deal in which South Sudan agreed to provide it with five shipments of oil in return for a US$100mn pre-payment.
But today London’s Commercial Court sided with BGN and A&M, finding BB Energy has no arguable claim to the three specific cargoes at the heart of the dispute, which a lawyer for BGN said are worth around US$60mn each at current prices, more than double the pre-payment value.
Justice Mark Pelling said the trader has not demonstrated that the cargoes were “ascertainable” to it, under the relevant legal test.
BGN and A&M could have similar claims to having ascertained the cargoes, Justice Pelling found, and may have had a stronger case because BGN had received an “award letter” from the government of South Sudan, unlike BB Energy.
Justice Pelling also dismissed BB Energy’s arguments that a judgment of damages, instead of an injunction, against South Sudan would be detrimental because of the expected difficulty of enforcing any judgment against the country.
The court found that argument was not sufficient to stray from the legal principles. The trader’s “difficulty” on that subject “stems from the fact the claimant chose to transact with the defendant on the terms it did”, Pelling found in a verbal judgment. “That carried risk which it could have mitigated by the way it sought to structure the transaction. It chose not to do so. That was its choice.”
Justice Pelling also noted that an intervention by the court, even on a limited basis, would “create obvious commercial difficulty” because one of the cargoes is already awaiting loading, and because it would scupper sub-purchase contracts that had already been signed for the cargoes.
An attempt by a sub-buyer, Cathay Petroleum, to intervene was dismissed because the judge said the company has no direct claim against South Sudan, or relationship with BB Energy.
Earlier in May the High Court ordered the South Sudanese government and third parties, such as traders and banks, not to enter into or facilitate any pre-payment arrangements until BB Energy has been repaid.
BGN and A&M’s pre-payment agreements were struck prior to that order, and another hearing on the matter is scheduled for June 5.
BB Energy also previously won a temporary injunction over one cargo late last year, although it was later discharged. It secured one shipment from South Sudan in February.
BB Energy, BGN, and a lawyer representing A&M did not immediately respond to a request for comment.
