MMHE said on Monday its major subdiary Malaysia Marine and Heavy Engineering Sdn Bhd (MMHE Sdn Bhd) had received a notice of arbitration dated March 13 from KPOC.
The first contract was for the fabrication of the topsides for the Kebabangan field, about 135km northwest of Kimanis, Sabah betweem KPOC and Sime Darby Enginering Sdn Bhd. The contract was dated Sept 20, 2011.
The second was a novation agreement in relation to a contract, dated March 30, 2012 between KPOC, Sime Darby Engineering and MMHE's unit.
MMHE said the the Kebabangan platform was developed as a hub for development of deepwater oil and gas assets in the North Sabah area.
MMHE Sdn Bhd was responsible to carry out and complete certain works for KPOC, including to construct, engineer, procure, fabricate, inspect, test & pre-commission, load-out and sea-fastening of the Kebabangan topsides and associated appurtenances. The works were completed in June 2014.
However, KPOC, in its notice of arbitration, claimed MMHE Sdn Bhd was and is in breach of the contracts due to the supply of certain valves.
“KPOC has included an indicative amount of its alleged loss as part of the notice of arbitration, at about RM125.1mil, and has claimed that it continues to allegedly suffer losses,” it said.
MMHE said the expected loss, if any, arising from this claim would be about RM125.1mil million, or more. However, no operational impact is expected to arise from the claim.
“MMHE will vigorously defend the claims made by KPOC and is presently exploring its options to pursue a counterclaim against KPOC,” it said.
“Apart from the arbitration proceeding, MMHE reserves its right to pursue any other legal actions as may be permitted under the Malaysian laws, including, if appropriate, to seek indemnity from the ultimate supplier of the said valves.”