Shell launches counter-attack in Malaysia platform case

Oil giant Shell has filed a counterclaim in a dispute over the delivery of the Gumusut-Kakap semi-submersible production platform in Malaysia.

To remind, Shell in February lost an arbitration in which MISC, the Malaysian contractor that built the platform, sought „outstanding additional lease rates, payment for completed variation works and other associated costs under the Lease Agreement dated 9 November 2012.“

Shell was ordered to pay $255 million, through additional lease rates under the platform lease contract signed in November 2012. The platform has been producing oil offshore Malaysia since 2014.

In a Bursa Malaysia filing on June 2, MISC said Shell had launched a counter claim seeking $583 million.

According to MISC, Shell is counterclaiming against MISC for alleged defective work, alleged limited functionality of the Gumusut–Kakap Semi-Floating Production System, liquidated damages and a refund of the full amount paid to MISC under the previous arbitration ruling.

MISC said it maintained its view on the strength of its claims against Shell and will “rigorously resist and defend against” Shell’s counterclaims during the course of the arbitration proceedings.

Also, the company said the contract with Shell provides a limitation of liability clause which limits total liability to Shell for any claims arising from the contract to a maximum amount of $200 million.

The arbitration hearing has been fixed for February 25, 2019 to March 16, 2019 with the arbitration award expected to be issued around year 2020.

According to MISC, the arbitration proceedings 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 Shell since October 2014.

Offshore Energy Today has reached out to Shell seeking comment.

A Shell spokesperson responded: “Sabah Shell Petroleum Company Limited (SSPC) has submitted its defence and counter claim on 30 May 2017 in the arbitration commenced by Gumusut-Kakap Semi-Floating Production System (Labuan) Limited (GKL).

“SSPC’s counter claim is for rectification and remedial works, and damages resulting from GKL’s failure to perform and deliver upon its contractual obligations. As this is a matter for arbitration, we are not able to share further details. We will focus all efforts towards ensuring a positive outcome for SSPC.”

Offshore Energy Today Staff

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