KUALA LUMPUR (Oct 11): Sapura Energy Bhd said a contract for the engineering, procurement, construction and installation (EPCI) of the single buoy mooring (SBM) Pipeline Rejuvenation Phase II Project in Singapore has been terminated.

The said contract had been initially bagged together with its consortium partner Dredging International Asia Pacific back in 2020, and formed part of a larger cluster of contracts worth RM766 million.

The contract, which was awarded by Shell Eastern Petroleum (Pte) Ltd, involves pre-emptive repair of the nearshore pipeline section, rejuvenation of the SBM system and optional removal of existing pipeline to ensure fitness for service of the crude offloading system to Bukom Refinery in Singapore.

In its latest bourse filing, the Practice Note 17 company said the termination came after its wholly-owned subsidiary Sapura Offshore Sdn Bhd (SOSB) received a letter dated Sept 20, 2023 from Shell and a without prejudice meeting between both companies on Oct 5, 2023.

“Following thereon, without admission of liability and reserving all of SOSB’s rights, the contract is considered terminated by Shell,” said Sapura Energy.

Meanwhile, Sapura Energy said SOSB had sought advice from its external counsel and will continue to do so on SOSB’s legal position therein.

Last week, Sapura Energy said two of its wholly-owned subsidiaries, including SOSB, were served with separate notices of arbitration. The arbitration notices involve disputes with Brunei Shell Petroleum Company Sdn Bhd (claimant).

The first arbitration is against Sapura Fabrication Sdn Bhd (SFSB) regarding a contract for engineering, procurement, construction and installation works related to the Salman project in Brunei. Brunei Shell Petroleum Co had purportedly terminated part of the contract for cause on March 13, 2023, for various alleged breaches of the contract by SFSB.

The second arbitration against SOSB is in regards to a contract for the pipeline replacement project in Brunei in 2020.

The group slipped into Practice Note (PN17) status on May 31, 2022 due to going concerns over its shareholders’ equity position of RM85 million as of Jan 31, 2022, which was less than 50% of its share capital of RM10.9 billion.

The group has two months to submit its regularisation plan to Bursa Securities for approval before the expiring of the extension date (Nov 30, 2023) granted by Bursa Malaysia.

For the first six months ended July 31, 2023 (1HFY2024), the firm saw its net profit more than double to RM188.89 million from RM89.34 million in the previous corresponding period, while revenue grew 1.7% to RM2.09 billion from RM2.06 billion.

The higher profitability for 1HFY2024 was lifted by better earnings contributions from its drilling and exploration and production segments.

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