Three partners follow Petronas in MHS heli contract termination

After Malaysian state-owned firm Petronas terminated a contract with the helicopter services provider MHS Aviation for the provision of transportation of personnel to offshore facilities, three other companies followed suit. 

Namely, MHS Aviation, a 51% subsidiary of Boustead Holdings, has also received termination letters from Sapura Exploration and Production, EQ Petroleum Production Malaysia, and ExxonMobil Exploration and Production Malaysia each giving MHS a 90 days’ notice of intention to terminate the contract dated June 29, 2011, for the provision of rotary wing aircraft, equipment and services for heavy type aircraft – EC225.

Together with Petronas Carigali, Sapura, EQP and ExxonMobil are joint operating partners for the contract, Boustead Holdings explained in a Bursa Malaysia filing on Wednesday.

To remind, 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.

In its statement last Sunday, Petronas confirmed the contract termination saying it was 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.

MHS received termination notices from the three partners after Petronas Carigali had done so on June 9, 2017. MHS and Petronas are currently involved in an arbitration regarding disputes which arose from the contract. MHS has sought and obtained legal advice on these terminations and has also put on record that it did not agree that these termination notices have been validly issued.

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

Offshore Energy Today Staff

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