Bumi suspends Oyo FPSO over Erin debts

Malaysian FPSO provider Bumi Armada has suspended the bareboat charter and operations and maintenance contracts with Erin Energy for the FPSO Armada Perdana operating at the Oyo oil field off Nigeria. 

Bumi’s subsidiaries, Armada Oyo Limited (AOL) and Bumi Armada (Singapore), are in charge of the bareboat charter and operations and maintenance contracts on the FPSO Armada Perdana for Erin Petroleum Nigeria Limited, a subsidiary of Erin Energy.

Bumi Armada informed in a Bursa Malaysia filing on Wednesday that the suspension of operations is due to longstanding delays in the bareboat charter payments due to Bumi Armada, as well as irregular payments on the operations and maintenance contract.

After issuing notices of overdue payment and letters of demand requesting immediate payment of undisputed outstanding sum to Erin’s Nigerian subsidiary, Bumi claimed that Erin has not responded.

Therefore, Bumi Armada (Singapore) is suspending the performance of its obligations under the O&M contract, except for the critical maintenance and other activities to mitigate occupational health and safety and environment risk, and AOL is suspending the performance of its obligations under the charterparty. Both suspensions are effective from 12.00 p.m. Lagos time on June 21, 2017.

Commenting on the suspension of operations, Leon Harland, Executive Director and Chief Executive Officer of Bumi Armada said, “This situation has been brought about by Erin’s refusal to provide us with a clear structure of how they intend to comply with the contractual agreements as well as repay the amounts owing to Bumi Armada, despite our repeated attempts to resolve the situation amicably. This situation has gone on long enough and Bumi Armada has taken the decision to enforce its rights under the contracts and to be paid in accordance with the contractual terms.

“The group is willing to work with our clients to reach mutually agreeable solutions during challenging times or events, on a good faith basis. However, such solutions must be sufficient and reasonable, as a resolution to the outstanding amounts that Erin owes to Bumi Armada.”

The FPSO Armada Perdana has been deployed to work at the Oyo field since 2008 and the production from the field started in December 2009. It has a production capacity of 40,000 barrels of oil per day, and storage capacity of 1.1 million barrels. The associated gas is re-injected into the Oyo field reservoir to maximize oil recovery.

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