Yinson's 49%-owned firm gets notice of termination for RM3.3bil contract

Yinson's Lam Son floating production, storage and offloading vessel at Keppel shipyard, Singapore

KUALA LUMPUR: A joint venture between Petroliam Nasional Bhd (Petronas) and PetroVietnam has terminated a bareboat charter contract valued up to US$737mil (RM3.3bil) awarded to Yinson Holdings Bhd’s associate firm PTSC Asia Pacific Pte Ltd.

In a filing with Bursa Malaysia, offshore support services provider Yinson said Lam Son Joint Operating Company (LSJOC) issued the notice of termination to PTSC Asia Pacific, a 49:51 joint venture between it and PetroVietnam Technical Services Corp (PTSC).

LSJOC is the operator of the Lam Son field offshore Vietnam. Floating production storage and offloading system (FPSO) PTSC Lam Son has been operating in Lam Son Field since June 2014. 

The bareboat charter, signed in 2012, was for a fixed primary term of seven years starting June 2014. The termination, to occur at 2400 hours (Vietnam time) on June 30, 2017. means that there are four years left in the original contract period.

The contract cancellation is due to the liquidation of LSJOC, which is scheduled to occur on June 30, 2017, according to Yinson.

In December 2012, PTSC Asia Pacific had signed a senior secured loan facility to raise up to US$300mil (RM1.3bil) - 41% of the contract’s value - to fund the conversion of the FPSO to be chartered to LSJOC.

LSJOC is jointly owned by PetroVietnam’s wholly-owned subsidiary PetroVietnam Exploration Production Corp and PC Vietnam Ltd, a unit of Petronas.

Pursuant to the terms of the bareboat charter, PTSC Asia Pacific is entitled to an early termination payment (ETP) from PTSC.

Yinson said the exact quantum of the ETP would be determined based on the terms of the bareboat charter.

“Notwithstanding the receipt of the notice, PTSC had informed PTSC Asia Pacific that Vietnam Oil & Gas Group (PetroVietnam), the ultimate holding company of one of the shareholders of LSJOC, has the intention for the petroleum operations to continue at Lam Son Field despite the liquidation of LSJOC. It is the intention of PetroVietnam to continue to utilise FPSO PTSC Lam Son for this purpose,” it said.

Yinson said PTSC Asia Pacific reserved its contractual rights and remedies pursuant to the bareboat charter.

“Accordingly there is no material adverse financial impact to PTSC Asia Pacific, Yinson will continue to work together with PTSC on future developments during the transition period,” the company added.

The bareboat charter was signed on Dec 28, 2012, for provision and chartering of FPSO PTSC Lam Son for the field of Thang Long – Dong Do, Blocks 01/97 & 02/97, offshore Vietnam. Yinson’s website gives the FPSO contract value as being up to US$737.3mil.