Monday, 5 June 2017

Sabah Shell files over RM4b counterclaim against unit of Petronas

Sabah Shell Petroleum Company Ltd (SSPC) has filed in a statement of defence and counterclaim (SDCC) of US$1.023 billion (US$1=RM4.279) against MISC Bhd's unit, Gumusut-Kakap Semi-Floating Production System (L) Ltd (GKL).

In a filing to Bursa Malaysia, SSPC refuted claims by GKL, a unit of Petroliam Nasional Bhd (Petronas), and is counter-claiming against GKL for alleged defective work and limited functionality of the Gumusut-Kakap Semi-Floating Production System, liquidated damages and a refund of the full amount paid to GKL under the adjudication decision rendered in the proceedings.

GKL commenced the legal proceedings seeking 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 Nov 9, 2012, between GKL and SSPC for the construction and lease of the Gumusut-Kakap Semi-Floating Production System (Semi-FPS) for production of crude oil.

The adjudication was awarded in favour of GKL in February 2017 for approximately US$255 million, to be paid to GKL as additional lease rates pursuant to the contract.

Meanwhile, under the arbitration proceedings, GKL also claimed for approximately US$185 million for additional lease rates and other direct costs.

"In its SDCC, SSPC is claiming approximately US$583 million along with any applicable interest; repayment to SSPC for the full amount paid to GKL under the adjudication decision rendered in the proceedings; and the costs and expenses of the adjudication and arbitration proceedings," it said.

GKL's previous claims amounted to some US$440 million.

"GKL maintains its view on the strength of its claims against SSPC and will rigorously resist and defend against SSPC's counterclaims during the course of the arbitration proceedings.

"The contract also provides a limitation of liability clause which limits GKL's total liability to SSPC for any claims to a maximum of US$200 million, including claims for liquidated damages," GKL said.

GKL said it was still assessing the merits of the claims made by SSPC and any potential material impact on the earnings per share, gearing and net assets per share of MISC Bhd for the financial year ending Dec 31, 2017, arising from the proceedings.

Further announcements on any material developments on the arbitration proceedings will be made in due course, GKL added.