Malaysia's MISC Berhad has launched arbitration proceedings against Shell to seek resolution on contractual disputes worth some US$245 million concerning the construction and lease of the Gumusut-Kakap semi-floating production system (Semi-FPS), offshore Malaysia.
MISC Berhad’s wholly-owned subsidiary Gumusut-Kakap Semi-Floating Production System Ltd. (GKL), began arbitration proceedings against Sabah Shell Petroleum Co. (SSPC).
MISC said GKL has filed a notice of adjudication dated 23 September 2016 under the Construction Industry Payment and Adjudication Act 2012, and also a notice of arbitration dated 2 September 2016 with the Kuala Lumpur Regional Centre for Arbitration.
These legal proceedings will seek resolution on contractual disputes covering claims for outstanding additional lease rates, payment for completed variation works and other associated costs under the lease agreement dated 9 November 2012 between GKL and SSPC.
The agreement is for the construction and lease of the Gumusut-Kakap semi-floating production system (Semi-FPS) for crude oil production from the Gumusut-Kakap deepwater field, offshore Sabah, Malaysia.
Shell is the operator of the Gumusut-Kakap project with 33% interest along with joint venture partners ConocoPhillips Sabah (33%), PETRONAS Carigali (20%) and Murphy Sabah Oil (14%).
MISC said the legal proceedings are not expected to have any material impact on the earnings per share, gearing and net assets per share of the company for the financial year ending 31 December 2016.
“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 continue to be paid by SSPC since October 2014,” it said.
Image: Gumusut-Kakap Semi-FPS / Shell
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