Petronas' partners also seek to end contract with MHS Aviation - Business News | The Star Online

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Petronas' partners also seek to end contract with MHS Aviation


Petronas' integrated petroleum complex in Kertih, Terengganu.

Petronas' integrated petroleum complex in Kertih, Terengganu.

KUALA LUMPUR: Following Petronas Carigali Sdn Bhd’s 90-day notice to terminate its EC225 helicopter charter contract, MHS Aviation Bhd has also received similar notices from Petronas Carigali’s joint operating partners for the contract.

Boustead told Bursa Malaysia on Wednesday that Sapura Exploration and Production (PM) Inc, EQ Petroleum Production Malaysia Ltd and ExxonMobil Exploration and Production Malaysia Inc had also gave its 51%-owned subsidiary 90-day notices of their intention to cancel the contract dated June 29, 2011.

The contract is for the provision of rotary wing aircraft, equipment and services (for heavy type aircraft – EC225).

MHS received the termination notice dated June 9 from Petronas Carigali earlier this month.

Petronas, in response to Boustead’s announcement to the stock exchange, said MHS provided the services of five EC225 helicopters from Kertih, Terengganu, for the transportation of personnel to offshore facilities operated by Petronas Carigali in Peninsular Malaysia.

“The termination is within Petronas Carigali’s contractual rights, following the service suspension of the EC225 since April 2016 due to safety concerns arising from a fatal accident involving the same aircraft model in Norway in the same month of last year,” the national oil company said in a statement on Sunday.

Based on Boustead’s announcement to Bursa Malaysia in December 2010, the EC225 contract was originally for a period of 10 years (to March 2021) with an option to extend for another five years. It then estimated the value of the contract at about RM3.1bil.

MHS and Petronas Carigali are currently involved in an arbitration regarding disputes which arose from the said contract. MHS had on Sept 1 last year issued a notice of arbitration against Petronas Carigali, claiming, among others, damages of RM42.76mil.

In its latest announcement, Boustead said MHS had obtained legal advice on these new terminations.

“MHS has also put on record that it did not agree that these termination notices have been validly issued. MHS views this as a breach of the contract by the said parties and will treat any attempt to terminate the said contract on the basis of such notice as a repudiatory breach of the said contract,” it said.

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