PETRONAS reaches deal with SapuraKencana and Petrofac for the cessation of the Berantai Risk Service Contract located offshore Terangganu, Malaysia.
Malaysia's national oil company (NOC) Petroliam Nasional Berhd (PETRONAS) announced Monday that it has reached an agreement with Petrofac Energy Developments Sdn Bhd and SapuraKencana Petroleum Berhad's subsidiaries Kencana Energy Sdn Bhd and Sapura Energy Ventures Sdn Bhd for the cessation of the Berantai Risk Service Contract (RSC) located in Block PM 309 offshore Terangganu, Malaysia.
"The RSC’s cessation will allow PETRONAS to minimize the project’s long-term value erosion and optimize the development and production activities in Malaysia, in line with its efforts to reduce costs and increase the efficiency of its operations," the state-owned firm said in the press release.
PETRONAS will reimburse the balance of outstanding capital and operational expenditures to the contractors over the following 12 months following the RSC cessation that will take effect Sept. 30. Under the agreement, the contractors will transfer ownership of the Berantai FPSO (floating production, storage and offloading) facility to the NOC.
“We continue to support PETRONAS in its efforts to reduce costs and optimize its operations with a view of preserving the long-term value of the project. We would like to thank PETRONAS for giving us the opportunity to demonstrate our capabilities to construct and install an integrated facility for the Berantai field. Together with our partner, we have managed to operate the facilities over the past 4 years safely," Shahril Shamsuddin, president and Group Chief Executive Officer of SapuraKencana Petroleum said in a separate press release.
With oil prices trading at half of its level since the downturn commenced two years ago, the RSC cessation might be positively received by the contractors -- SapuraKencana Petroleum and Petrofac.
"They could recoup all the costs (associated with the Berantai RSC) with cash up front. Cash is king in the current market," an industry source told Rigzone, referring to SapuraKencana Petroleum, which is now a "tested and proven entity in the provision of integrated oil services (for upstream development)."
Berantai was the first RSC awarded by PETRONAS Jan. 31, 2011. Partners in the RSC are Sapura Energy Ventures, Kencana Energy and field operator Petrofac Energy Developments, each with interest of 25 percent, 25 percent and 50 percent, respectively.
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