Petronas breaks off helicopter deal with MHS

Malaysian oil company Petronas has terminated a contract for the provision of transportation of personnel to offshore facilities with the helicopter services provider, MHS Aviation. 

MHS Aviation, a 51% subsidiary of Boustead Holdings, had received a letter dated June 9, 2017, from Petronas Carigali giving it a 90 days’ notice of Petronas’ intention to terminate without cause contract dated June 29, 2011, for the provision of rotary wing aircraft, equipment and services for heavy type aircraft – EC225.

By the contract, MHS was engaged by Petronas to provide it with five EC225 helicopters for use in Petronas Carigali’s oil and gas exploration and production operations. The use of all five helicopters was, however, suspended by Petronas unilaterally following two forced landings in the North Sea in May and October 2012 involving EC225 helicopters that were unconnected to the parties in the present case. MHS saw then suspension as a breach of contract and in September 2016 claimed the arbitration for damages in the sum RM42,760.810.68.

According to a Friday Bursa Malaysia filing by Boustead, while discussions between the parties regarding the arbitration proceedings were ongoing, MHS received notice of termination. For its part, MHS has put on record that it did not agree that this termination notice has been validly issued.

“MHS views this as a breach of the contract and will treat any attempt to terminate the said contract on the basis of such notice as a repudiatory breach of the contract,” the company emphasized.

In a statement on Sunday, Petronas confirmed the contract termination saying it is within the company’s contractual rights following the service suspension of the EC225 since April 2016 due to safety concerns arising from a fatal accident involving the same aircraft model in Norway in the same month of last year.

The company also added that the suspension of the EC225 service by the Norwegian and UK civil aviation authorities has yet to be lifted and most major oil and gas companies have also ceased using the aircraft model pending assurance of its safety and airworthiness.

Offshore Energy Today Staff

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