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Houston — A Texas state district court judge has ordered China's Oriental Energy to pay $523.8 million in damages to Germany's Mabanaft following an LPG contract dispute.

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The final judgment was signed April 10 after the court sided with Mabanaft in October 2017, finding that Oriental had breached its propane contract with Mabanaft by failing to provide a letter of credit ahead of its first scheduled shipment. Mabanaft had asked for $553 million in damages.

Mabanaft filed the lawsuit in a Harris County District Court in November 2016 regarding the contract signed in 2013 to sell propane cargoes over a five-year period starting in January 2017.

"The court found OE China breached a $4 billion contract based on its temporary inability to post an immaterial $5.5 million standby letter of credit due to a change in Chinese currency controls," said Lynne Liberato, Oriental's appellate counsel and partner at Haynes and Boone.

Liberato also said in an emailed statement that the judgment allows Mabanaft to benefit twice, "both by awarding it damages and by permitting it to retain the proceeds from reselling the propane it never delivered."

"We look forward to bringing these and other issues to the appellate courts for review," Liberato said.

Attorneys for Mabanaft did not respond to a request for comment.

In his October ruling siding with Mabanaft, Judge Jeff Shadwick said both companies agreed to a liquidated damages provision and, while the resulting fees are large, that "is what the parties bargained for," he said.

"Where the subject matter of the agreement is a bet about the future, liquidated damages made perfect sense, and OE China's breach cannot be immaterial where it is used as an excuse to escape the downside of its bet," Shadwick wrote in the ruling signed October 5.

Since the contract was signed in 2013, the US has evolved into the world's largest exporter of propane with the start up of two new terminals on the Gulf Coast -- Energy Transfers' in Nederland, Texas, and Phillips 66's in Freeport, Texas -- and expansions to Enterprise's and Targa's terminals on the Houston Ship Channel.

(Adds attorney comment)

--Andrea Salazar,

--Edited by Jennifer Pedrick,