Court rules in favor of Woodside in Bumi FPSO termination case

The Supreme Court of Western Australia has ruled in favor of Australian energy giant Woodside in a dispute over early termination of Bumi’s Armada Claire FPSO charter.

Armada Claire FPSO; Image: Bumi Armada

The Woodside said on Friday that the Supreme Court of Western Australia had dismissed Bumi Armada’s claim for compensation following termination of the Armada Claire FPSO charter in March 2016.

According to the Australian company, the trial was held during February and March 2019.

To put things into context, Bumi Armada signed the contract with Apache to provide the FPSO Armada Claire for the Balnaves Field in September 2011. The contract was for an initial fixed term charter of four years expiring in August 2018, with options for four annual extensions. At the time of the award, the contract was valued at approximately $357.5M.

Woodside bought Apache’s 65 percent interest in the field in April 2015, and the contract was novated to the company in May of the same year.

Woodside then terminated the charter for the FPSO on March 4, 2016, more than two years before the charter contract end. Bumi deemed the termination unlawful and decided to take legal action against the oil company.

At the time, Bumi said it had intended to fully enforce its rights under the contract, including initiating legal proceedings against Woodside for its unlawful purported termination of the contract.

On March 11, 2016, Bumi Armada’s subsidiary Armada Balnaves sent a counter-notice of termination to Woodside. Under the counter-notice, Armada Balnaves reserved the right to claim damages for the breach of the contract.

Bumi went further with the dispute by starting a court action against Woodside only days later. The FPSO owner stated in the court case that the damages for breach of contract would be quantified at a later stage and that it also wanted reimbursement for an additional sum of $66.2 million for work done and materials supplied pursuant to the contract, interest, costs, and other relief as the court deemed fit.

In April 2016, the height of the damages was disclosed in a $283.5 million claim which was submitted to the Supreme Court of Western Australia.

According to Bumi, the sum of $275.8 million is the amount of the termination payment to which Armada Balnaves is entitled had the contract been terminated without breach, plus any additional damages for loss of bargain caused to Armada Balnaves as a consequence of Woodside’s repudiation of the contract.

An additional sum of $7.7 million was sought for work done and materials supplied pursuant to the contract.

Offshore Energy Today staff

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