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Exxon Mobil Sues Prysmian Over Bad Submarine Cable

Exxon Mobil Corp. says Prysmian Power Cables and Systems USA LLC sold the oil giant defective submarine power cables that were supposed to last for 40 years and has reneged on its contractual obligations to pay for the repairs.

According to a complaint filed Monday in the U.S. District Court for the Southern District of New York, Exxon Mobil claims that Prysmian has failed to live up to the terms of an over $13.7 million contract that Pirelli Power Cables and Systems USA LLC agreed to in 2001 by not covering repair costs.

Prysmian purchased Pirelli in August 2005 and took on all of its contractual obligations, according to the complaint.

Exxon Mobil said that it chose Pirelli to build the C1 and D1 underwater cables, which were intended to provide electricity to Exxon Mobil drilling platforms off the coast of Santa Barbara, Calif., because of the company's guarantee that the cables would last for 40 years and a five-year warranty that obligated Pirelli to cover any repair costs for the cables.

But within four years, the C1 cable experienced a failure. After an initial repair, the same cable failed again within two years, the complaint said.

"Thus, within six years of its installation, the Pirelli/Prysmian C1 cable failed twice," Exxon Mobil claimed.

The Irving, Texas-based oil company claims that the cables came riddled with manufacturing and installation defects and anomalies. In addition, Pirelli ignored "well -established industry tenets" and its own standards and guidelines for grounding internal components of submarine cables, the complaint said.

Prysmian, an Italian company whose U.S. operations are headquartered in Lexington, S.C., failed to honor its contractual warranty following the first failure, Exxon Mobil alleged, and that failure has continued.

"Defendants have refused, to this day, to step up and abide by their contractual obligations and commitments stemming from the C1 cable failure," the complaint said.

Exxon Mobil is bringing claims of gross negligence; false and negligent representations; defective product and installation practices; and unlawful conduct against Prysmian as well as a claim that the company evinced intentional disregard for its obligations to the world's largest publicly traded oil company.

Neither Exxon Mobil nor Prysmian could be reached for comment.

Exxon Mobil is represented by Kirkland & Ellis LLP attorneys Andrew A. Kassof and Seth A. Gastwirth.

Counsel information for Prysmian was not available.

The case is Exxon Mobil Corp. et al. v. Prysmian Power Cables and Systems USA LLC et al., case number 10-cv-08806, in the U.S. District Court for the Southern District of New York.