INVESTOR RELATIONS

FORM OF NOTICE OF CONVERSION OF 5-YEAR 3.5% REDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS ("RCULS" OR "BARAKAH-LA")

BURSA ANNOUNCEMENTS
Date : 05 November 2020

MATERIAL LITIGATION Notice of Arbitration from Petrofac (Malaysia-PM304) Limited

BARAKAH OFFSHORE PETROLEUM BERHAD

Type Announcement
Subject MATERIAL LITIGATION
Description
Notice of Arbitration from Petrofac (Malaysia-PM304) Limited

Pursuant to paragraph 9.04(g) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Malaysia”), the Company wishes to announce that its wholly-owned subsidiary, PBJV Group Sdn Bhd (“PBJV”) has been served with a Notice of Arbitration from Petrofac (Malaysia-PM304) Limited (“Petrofac”) for a sum of USD1,190,676.82 (approximately RM4,951,429.56*) on 3 November 2020.

 

Petrofac’s claim of USD1,190,676.82 is related to the ‘anchor dropping’ incident on 6 November 2014 (“the Incident”), during the course of work of ‘Contract No. PM/PR/C/12-001 – Provision of Hook Up, Commissioning and Topside Major Maintenance Services for the year 2013 to 2018’ (“the Contract”), wherein PBJV is the contractor to Petrofac.

 

The background leading to Petrofac’s claim (the Incident) is as follows:

 

(a)     In accordance with the terms of the Contract, Petrofac had issued Work Order No. PML/2014/CP2-017C-01 dated 29 October 2014 to PBJV, for the Provision of Accommodation Work Boat;

 

(b)     PBJV has then chartered the vessel known as “Armada Firman”, through PBJV’s subcontractor, Asian Kaliber Sdn Bhd (“Asian Kaliber”), to cater as an accommodation vessel for personnel involved in the commissioning works on Wellhead Platform CDW-B, CDW-C & FPSO Cendor;

 

(c)     Based on representation made, Armada Firman is owned by Bumi Armada Navigation Sdn Bhd (“Bumi Armada”);

 

(d)     On 6 November 2014, Armada Firman was being positioned with four-point anchors next to Wellhead Platform CDW-B, assisted by an anchor handling tug vessel known as the “Executive Pride”, owned by Petrofac;

 

(e)     During the positioning of the anchors, Armada Firman and Executive Pride drifted over Block PM304 subsea pipelines, and due to the failure of Armada Firman’s Master to follow established procedures during mooring operations and the miscommunication between Armada Firman’s Master and Executive Pride’s Master, an anchor was dropped near the flexible 12” flowline between Wellhead Platform CDW-C and the FPSO Cendor;

 

(f)      Armada Firman then tried to recover the said dropped anchor which resulted in the anchor flukes being caught under flowline No. 2, displacing and damaging the said flowline; and

 

(g)     The anchor line was then cut off and mooring operations suspended for 18 days to allow the investigation to be completed and replaced with new anchor wire and anchor.

 

Following the Incident:

 

(a)     Petrofac had submitted a claim on 28 November 2014 under Petrofac’s own insurance policy and undertook the necessary repairs of 12” CDW-C (Prod #2) Flowline in order to mitigate the damages;

 

(b)     The total cost of the repair amounted to USD3,414,470.50 (approximately RM14,199,075.57*) of which the entire sum was submitted to Petrofac’s insurers. Petrofac’s insurers had approved and indemnified Petrofac with the costs of repairs relating the said damaged flowline; and

 

(c)     However, as part of the terms and conditions of Petrofac’s insurance policy, Petrofac is still required to bear a deductible / excess in a sum of USD1,000,000.00 and further required to pay its insurers an additional 7% premium of the claims paid out (which Petrofac is now claiming from PBJV).

 

The breakdown of Petrofac’s claim in a sum of USD1,190,676.82 is as follows:

 

(a)     Deductible / Excess sum of Petrofac’s Insurance Policy in the sum of USD1,000,000.00; and

 

(b)     Additional 7% Premium in the sum of USD190,676.82.

 

 

 

PBJV shall oppose to Petrofac’s Notice of Arbitration on the grounds that:

 

(a)     Petrofac’s Notice of Arbitration against PBJV has no basis whatsoever;

 

(b)     PBJV has no control over Armada Firman (as PBJV’s scope of works is only on the provision of works to hook-up, tie-in, inspect, calibrate, test, pre-commission and commission of facilities);

 

(c)     The Incident had taken place due to the failure of Armada Firman’s Master to follow established procedures during mooring operations and the miscommunication between Armada Firman’s Master and Executive Pride’s Master (which is Petrofac’s); and

 

(d)     Therefore, PBJV cannot be held liable for the costs incurred by Petrofac due to the same.

 

PBJV is of the view that Petrofac’s Notice of Arbitration against PBJV is not justified has and has a low chance of success. In the event Petrofac’s claim against PBJV is allowed, PBJV will have to pay Petrofac’s claim in a sum of USD1,190,676.82 (approximately RM4,951,429.56*).

 

In relation to Petrofac’s claims, pursuant to paragraph 9.04(f) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Malaysia”), PBJV has, on 3 November 2020, served a Writ and Statement of Claim  on Asian Kaliber and Bumi Armada under Kuala Lumpur High Court Civil Suit No. WA-27NCC-101-11/2020 for the said sum of USD1,190,676.82 (approximately RM4,951,429.56*)  (“Writ Action”).

 

Asian Kaliber and Bumi Armada are PBJV’s subcontractors under the Contract’s works (via a Letter of Award dated 4 April 2014, and Charter Party Agreement dated 22 April 2014) and owners of Armada Firman.

 

The basis of PBJV’s Writ Action against Asian Kaliber and Bumi Armada, is as follows:

 

(a)     the Incident occurred due to Asian Kaliber and Bumi Armada’s negligence and incompetence as owners and handlers of Armada Firman; and

 

(b)     therefore, Asian Kaliber and Bumi Armada are to indemnify PBJV from Petrofac’s claims for the said claim of USD1,190,676.82 and / or any other claims by Petrofac related to the same.

 

PBJV is of the view that PBJV’s Writ Action against Asian Kaliber and Bumi Armada has a fair chance of success. In the event PBJV’s Writ Action against Asian Kaliber and Bumi Armada is dismissed, PBJV will have to pay Petrofac’s claim in a sum of USD1,190,676.82 (approximately RM4,951,429.56*).

 

The Kuala Lumpur High Court has fixed the 1st Case Management for the Writ Action on 16 November 2020.

 

The Company will make the appropriate announcements to Bursa Malaysia as and when there are material developments in relation to Petrofac’s Notice of Arbitration against PBJV, and PBJV’s Writ Action against Asian Kaliber and Bumi Armada.

 

This announcement is dated 5 November 2020.






Announcement Info

Company Name BARAKAH OFFSHORE PETROLEUM BERHAD
Stock Name BARAKAH
Date Announced 05 Nov 2020
Category General Announcement for PLC
Reference Number GA1-05112020-00112


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