Bumi Armada intends to take legal action against Woodside Energy after Woodside terminated a floating production storage and offloading (FPSO) charter contract for operations offshore northwestern Australia.
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The Armada Claire. Image from Bumi Armada. |
Woodside subsidiary Woodside Energy Julimar sent Bumi’s wholly-owned subsidiary Armada Balnaves (ABPL), a notice of termination to end the contract for the charter of the Armada Claire, which has been operating in the Balnaves field, off north-western Australia since delivering first oil in August 2014.
Balnaves, located approximately 180km northwest of Karratha in production license WA-49-L, consists of four subsea wells: two horizontal production wells, one horizontal water injector, and one gas injector, that are tiebacks to the Armada Claire. In 2014, the field produced some 2 MMbbl. Woodside estimates economic ultimate recovery at Balnaves to be 6.7 MMbbl at 1P and 9.8 MMbbl at 2P.
“Bumi Armada’s position is that the purported notice of termination is not valid, and in fact tantamount to a cancellation for convenience or alternatively, is a repudiation of the contract by Woodside, pursuant to which the company is entitled to compensation from Woodside,” Bumi Armada said.
“The company intends to fully enforce its rights under the contract, including initiating legal proceedings against Woodside for its unlawful purported termination of the contract,” the Malaysia-based international offshore energy facilities and services provider said.
Woodside’s termination is expected in impact Bumi Armada’s full year 2016 financial results, but those results will depend on the legal action taken against the Australian explorer.
The RM1.46 billion ($359 million today) contract to supply and operate the Armada Claire was signed with Apache in September 2011 for an initial four-year fixed term time charter with an option of a further four-year extension.
Last year, Woodside acquired Houston-based Apache’s interest in the Balnaves project, in addition to Wheatstone, and Kitimat in a US$2.75 billion deal.
Bumi Armada first used a disconnectable turret design with the Armada Claire, which allows the turret to be disconnected and the vessel moved to safer water in the event of severe weather conditions.
The Armada Claire also marked Bumi Armada’s first foray into Australia and the first time Bumi Armada had converted and operated a vessel under the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) regulations.
Woodside operates of PL WA-49-L with 65% stake. Partner Kuwait Foreign Petroleum Exploration holds the remaining 35%.
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