Dutch FPSO provider SBM Offshore has reached full and final settlement of its insurance claim related to Repsol’s failed Yme development project located in the North Sea offshore Norway.
SBM Offshore said on Monday that the agreement now reached with remaining insurers of the Yme project follows partial settlements announced on July and August 2017 and August 2018.
To remind, in addition to last year’s announced binding settlement with a group of the primary insurers relating to the company’s insurance claim arising from the Yme project, SBM in August 2018 settled with the remaining primary insurers, as well as some additional insurers. SBM Offshore’s share in this additional settlement was for $16 million, net of claim related expenses.
Under the terms of the settlement agreement with Repsol, all insurance claim recoveries after expenses and legal costs are to be shared equally between the company and Repsol. The gross total recovery to be shared currently stands at around $340 million. The company continues to pursue its claim against the last remaining insurers. Unless settlement with these remaining insurers is reached, trial is scheduled to start in October 2018.
Including the prior settlements, SBM Offshore’s insurance recoveries related to the Yme project represent a total amount close to $390 million, which includes a final increment of $48.5 million.
After reimbursement of the significant claim related expenses and legal fees, the remaining amount of the insurance recoveries will be shared equally between SBM Offshore and Repsol (on behalf of the Yme license) in accordance with the terms of their settlement agreement of March 11, 2013 which concluded the Yme project.
As a result of this settlement the litigation against insurers and the associated trial which was due to start on October 1, 2018 will be put to an end, SBM said.
Bruno Chabas, CEO of SBM Offshore, commented: “Today’s settlement of this large insurance claim related to a project that ended in 2013 allows us to close this outstanding item from the past and to now fully concentrate on growing our business in an industry that shows strong signs of recovery.”
SBM Offshore had delivered the Yme Mopustor platform to Talisman (bought by Repsol in 2015) to produce oil from the Yme field in the Norwegian sector of the North Sea.
However, Talisman then identified structural issues with the platform, and evacuated the unit in mid-2012 saying there was a chance the platform could collapse.
The two companies then in March 2013 reached a decision to terminate the YME MOPUstor project, including scrapping the existing above surface structure, and ending all joint activity for an agreed cost. As part of the deal SBM Offshore agreed to pay a settlement fee of $470 million.
It was also agreed that the 14,000 tonne offshore structure and equipment would be dismantled and recycled by Veolia at Lutelandet.
On August 22, 2016, Allseas’ giant single-lift installation/decommissioning and pipelay vessel Pioneering Spirit removed the Yme offshore platform in a single lift.
The vessel used its 59 meters wide slot between bows to float in around the Yme platform and then lifted off the topside weighing more 13.000 tons in a single piece.
In December 2017, Repsol submitted a revised plan for development and operation of the Yme field to the Norwegian Ministry of Petroleum and Energy.
The revised PDO is based on re-use of existing facilities that were installed on the field during the development in 2007 to the extent possible, a new wellhead module on top of the existing caisson and the lease of a mobile offshore drilling and production unit.