EA Technique loses MMHE FSO case

Malaysian vessel operator EA Technique has lost a case against the compatriot engineering and construction firm Malaysia Marine Heavy Engineering (MMHE) and has been ordered to pay over $21.7 million.

The dispute stemmed from the two companies’ 2015 deal related to the EA Technique’s contract with Hess for the supply of an FSO vessel for its North Malay Basin project.

In February 2015, EA Technique entered into an engineering, procurement, construction installation and commissioning contract with Hess to deliver a floating storage and offloading facility for deployment in the North Malay Basin, located approximately 150 km North East off the shore of Kota Bharu in the state of Kelantan.

EA Technique then signed a deal with MMHE for where MMHE committed to carrying out the demolition, refurbishment, and conversion of a donor vessel into the FSO facility.

As per the previous statements by EA Technique and MMHE disputes arose relating to invoices for additional work orders related to the FSO contract leading to the two companies laying claims against each other.

While MMHE claimed it had not been paid for additional work carried out, EA Technique claimed it had overpaid for the original contract.

MMHE on Wednesday said that on 27 May 2019, the Adjudicator allowed MMHE’s claim in the sum of $21,6 million “including goods and services tax of 6% to be paid [ by EA Technique] by 28 June 2019 with interest of 1.5%  per month from 5 October 2018 until full and final settlement.”

“EATech is also directed to pay all costs of the adjudication including MMHE’s cost. Further, EATech’s cross-claim and set off for the sum of USD87,200.00 was allowed whereas the remaining cross-claims were dismissed,” MMHE said.

In a separate statement, EA Technique said: “The adjudication decision is not expected to have any potential business or operational impact on the company. At this juncture, the Adjudication Sum to be paid by the Company to MMHE has sufficiently been provided for in the Company’s accounts. The Company is in the midst of reviewing the Adjudication Decision to determine whether there are clear and unequivocal errors in the Adjudication Decision.”

Offshore Energy Today Staff

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