MISC Bhd has commenced arbitration proceedings against Sabah Shell Petroleum Co Ltd (SSPC), among others, to claim US$245 million and applicable interest.

KUALA LUMPUR: MISC Bhd has commenced arbitration proceedings against Sabah Shell Petroleum Co Ltd (SSPC), among others, to claim US$245 million and applicable interest.

In a filing to Bursa Malaysia, the company said its wholly-owned subsidiary, Gumusut-Kakap Semi-Floating Production System (L) Ltd (GKL) has filed a notice of adjudication dated September 23, 2016 against SSPC under the Construction Industry Payment and Adjudication Act 2012 and also a notice of arbitration dated September 2, 2016 with the Kuala Lumpur Regional Centre for Arbitration.

“The legal proceedings were commenced to seek resolution on contractual disputes covering claims for outstanding additional lease rates and payment for completed variation works under the lease agreement dated November 9, 2012 entered into between GKL and SSPC for the construction and lease of the Gumusut-Kakap Semi-Floating Production System for the purposes of the production of crude oil,” it said.

Among others, GKL is claiming from SSPC the total sum of US$245 million and applicable interest at any rate deemed fit by the tribunal/adjudicator, declaratory relief, the costs of the arbitration/adjudication and any further or other awards as the tribunal/adjudicator deems fit.

The company will make further announcement should there be any material development during the arbitration process.

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.

The lease period pursuant to the Contract remains intact and GKL will continue to receive payment from SSPC for the relevant lease period.

As advised by GKL’s solicitors, the company is of the view that GKL has a good legal position to succeed in its claims against SSPC.

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