Yinson’s $1B FPSO contract hangs in balance as Repsol ordered to halt Vietnam work
Yinson and PTSC joint venture’s $1 billion FPSO contract with Repsol in Vietnam might be in jeopardy following reports that Vietnam has ordered Repsol to halt work on Ca Rong Do field amid pressure from China.
Repsol’s subsidiary Talisman Vietnam, the operator of the Ca Rong Do field, has informed PTSC of a force majeure event directing the oil company “not to carry out the scheduled work program on the CRD Project for the time being.”
In a statement on Tuesday, Yinson, a partner in PTSC Ca Rong Do Ltd JV with Vietnam’s PTSC, said the JV sought clarification from Talisman on the nature of the alleged force majeure event, including particulars of how Talisman’s performance of its obligations under the FPSO has been affected.
To remind, the JV last year signed the contract with Talisman for the supply of an FPSO for a period of ten years with extension options with a total value of the bareboat charter of around $1.0 billion, options included.
The joint venture company has also sought info from Talisman on what action the oil company plans to undertake to remedy the situation under the provisions of the contract.
“Pending resolution of this matter, and in compliance with the Notice, PTSC CRD will endeavor to take all reasonable actions to mitigate the effects of the force majeure event. PTSC CRD will continue to monitor the situation closely and will assert its rights under all relevant contracts and in laws, for any claims, liabilities, losses, and/or damages against or suffered by it in any way concerning this matter,” Yinson said on Tuesday.
UK’s BBC has reported, citing a well-placed source, that PetroVietnam has ordered Repsol to suspend its Ca Rong Do work, to avoid confrontation with China due to the maritime border issue in the South China Sea. This could, a BBC source said, lead to Repsol losing $200m in investments already made.
The Ca Rong Do field development, located in Block 07/03 offshore southern Vietnam, is planned for development using a tension leg wellhead platform (TLWP), a tender assisted drilling vessel, and a floating production storage and offloading (FPSO) vessel.
The platform would be located in a water depth of 320 meters and host up to 20 wells including oil production, water injection and gas injection.
Talisman, a subsidiary of Spanish oil company Repsol, is the operator of the field, with PetroVietnam, Mubadala Petroleum, and PVEP as its partners.