Damages to be paid over eight years — Bumi Armada


Bumi Armada Bhd’s payment of US$85 million (RM351.9 million) pertaining to the delay in its delivery of a floating production storage and offloading (FPSO) vessel will be done progressively over the next few years, the shipping company said.

In a filing with Bursa Malaysia, Bumi Armada said the liquidated damages of US$20 million for Armada Kraken’s FPSO had been provided for in the accounts of the first half of its financial year ending Dec 31, 2016.

The remaining US$65 million, which serves as a partial reimbursement of the upfront amount paid by charterer EnQuest plc under the FPSO contract, will be accounted for over the firm charter period of eight years. According to Bumi Armada, the contract value for the FPSO job is about US$1.4 billion.

“The US$65 million will be paid in instalments, with US$38 million payable between February 2017 and February 2018, and the balance payable on a quarterly basis over a two-year period, commencing three months after the date of production of first oil,” added Bumi Armada.

The filing was in response to the Securities Commission Malaysia’s request to furnish further information, after a news report on Bumi Armada’s negotiation with EnQuest over the liquidation damages. The group filed an initial clarification with the stock exchange on Sept 15, saying the negotiation had ended and a new date had been agreed upon.

According to a source in the news report, the Armada Kraken’s sail-away date was set as Oct 16. Bumi Armada yesterday said the revised date of the FPSO from the Keppel Conversion Yard will be in October, with no specific date mentioned.



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