Bumi Ar­mada sees RM30mil hit from FPSO shut­down

Group to sus­pend ops to Erin Petroleum Nige­ria due to pay­ment de­lays

The Star Malaysia - StarBiz - - News -

PETALING JAYA: In­ter­na­tional offshore en­ergy fa­cil­i­ties and ser­vice provider Bumi Ar­mada Bhd es­ti­mates the fi­nan­cial im­pact of credit risk re­cov­ery from the shut­down of its float­ing pro­duc­tion, stor­age and of­fload­ing (FPSO) ves­sel Ar­mada Per­dana to be RM30mil, based on its re­sults for the fi­nan­cial year end­ing Dec 31, 2018.

Bumi Ar­mada first made an an­nounce­ment on this on June 21, 2017.

Bumi Ar­mada had said that its units – Ar­mada Oyo Ltd (AOL) and Bumi Ar­mada (Sin­ga­pore) Pte Ltd (BASPL) – were sus­pend­ing the bare-boat char­ter (BBC) and op­er­a­tions and main­te­nance (O&M) con­tracts, re­spec­tively, on the FPSO ves­sel Ar­mada Per­dana to Erin Petroleum Nige­ria Ltd (EPNL), a sub­sidiary of Erin En­ergy Corp.

It said the sus­pen­sion of opera- tions was due to long­stand­ing de­lays in the BBC pay­ments due to Bumi Ar­mada, as well as ir­reg­u­lar pay­ments on the O&M con­tract.

This sit­u­a­tion had been brought about by Erin’s re­fusal to pro­vide the group with a clear struc­ture of how it in­tended to com­ply with the con­trac­tual agree­ments and re­pay the amounts ow­ing to Bumi Ar­mada.

In a fil­ing with Bursa Malaysia yes­ter­day, Bumi Ar­mada said that on April 11, BASPL had re­ceived a no­tice from EPNL, among oth­ers, ad­vis­ing of a pur­ported “force ma­jeure event” and re­quest­ing the im­me­di­ate, or­derly shut­down of op­er­a­tions on the FPSO Ar­mada Per­dana.

Bumi Ar­mada said the com­pany had also re­ceived a no­tice of seizure/at­tach­ment of goods from a third party in­form­ing that the en­tire crude oil pro­duced and to be pro­duced and stored in Ar­mada Per­dana had been seized by a writ of at­tach­ment from the Fed­eral High Court of La­gos, in re­la­tion to le­gal pro­ceed­ings to which the Bumi Ar­mada Group is not a party.

“The com­pany had sought clar­i­fi­ca­tions from EPNL on such no­tice of seizure/at­tach­ment of goods, but EPNL has not re­sponded to the com­pany de­spite nu­mer­ous re­minders,” said Bumi Ar­mada.

Not­with­stand­ing the above, Bumi Ar­mada main­tains that the sus­pen­sion of pro­vi­sion of ser­vices under the bare­boat char­ter­party con­tract and op­er­a­tional and main­te­nance ser­vices con­tract re­spec­tively re­mains in place, and that EPNL is not re­lieved from its obli­ga­tion to make all pay­ments due to AOL and BASPL under the con­tracts.

Bumi Ar­mada is of the view that the pur­ported force ma­jeure dec­la­ra­tion by EPNL is wrong­ful under the op­er­a­tional and main­te­nance ser­vices con­tract, and the com­pany is re­view­ing its le­gal op­tions, in­clud­ing com­mence­ment of le­gal pro­ceed­ings against EPNL, to up­hold the con­trac­tual rights of AOL and BASPL under the con­tracts.

“The com­pany will con­tinue to pro­vide up­dates from time to time on any fur­ther ma­te­rial de­vel­op­ment on this mat­ter,” it said.

Bumi Ar­mada re­turned to prof­itabil­ity in the fourth quar­ter ended Dec 31, 2017, post­ing a net profit of RM63.8mil com­pared with a net loss of RM1.37bil in the same pe­riod a year ago.

Its turn­around came on the back of a higher rev­enue, which rose to RM662.1mil from RM106.2mil in the same pe­riod last year.

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