KUALA LUMPUR: MISC Bhd
’s unit Gumusut-Kakap Semi-Floating Production System (L) Ltd (GKL) has begun arbitration proceedings against Sabah Shell Petroleum Co Ltd (SSPC) to seek, among others, US$245mil (RM1.01bil) and applicable interest.
In a filing with Bursa Malaysia, the energy shipping firm said GKL filed a notice of adjudication dated Sept 23 against SSPC under the Construction Industry Payment and Adjudication Act 2012 and also a notice of arbitration dated Sept 2 with the Kuala Lumpur Regional Centre for Arbitration.
GKL leased Asia-Pacific’s first deepwater semi-submersible floating production system (semi-FPS) to SSPC for oil production at the Gumusut-Kakap field, a joint venture deepwater project between Shell (33%, operator), ConocoPhillips Sabah (33%), Petronas Carigali (20%) and Murphy Sabah Oil (14%).
MISC said it began the legal proceedings to resolve contractual disputes covering claims for outstanding additional lease rates, payment for completed variation works and other associated costs under the lease agreement dated Nov 9, 2012, between GKL and SSPC for the construction and lease of the semi-FPS for the purposes of producing crude oil.
Among others, GKL is claiming the following from SSPC:
* THE total sum of about US$245mil and applicable interest at any rate deemed fit by the tribunal/adjudicator;
* DECLARATORY relief;
* THE costs of the arbitration/adjudication; and
* ANY other awards as the tribunal/adjudicator deems fit.
The legal proceedings are not expected to have any material impact on the earnings per share, gearing and net assets per share of MISC for the financial year ending Dec 31, 2016.
MISC said it would make further announcement should there be any material development during the arbitration process.
“The legal proceedings initiated to resolve the contractual dispute will not have any impact on the operation of the semi-FPS or the performance of the contract, including the lease payments which have continued to be paid by SSPC since October 2014. The lease period pursuant to the contract remains intact and GKL will continue to receive payment from SSPC for the relevant lease period,” it added.
MISC said that based on the advice of GKL’s lawyers, it was of the view that GKL had a good legal position to succeed in its claims against SSPC.