Bumi Armada Declares 'Force Majeure' on ONGC FPSO Deal as Virus Hits Construction Schedule

November 19, 2020

World Energy Reports LLC.
An FPSO.png

Malaysian FPSO contractor Bumi Armada has declared a 'force majeure' event related to the FPSO contract it has with India's ONGC, citing the effects of the coronavirus pandemic on the FPSO construction schedule.

ONGC, in a joint venture with Shapoorji Pallonji, last year secured a 9-year, $2.1 billion, FPSO charter and operations contract with ONGC, on the Indian oil company's NELP Block DWN 98/2 Development Cluster-II field, located off the west coast of Kakinada, India.

The 30/70 Bumi-Shapoorji joint venture - then awarded a contract to convert the VLCC Ariake into FPSO to Singapore's Sembcorp. The vessel is designed to produce up to 90,000 barrels of oil per day (BOPD) and have a 1.3-million-barrel storage facility and was scheduled for delivery in the second half of 2021. 

However, in its quarterly report on Thursday, Bumi Armada said that the FPSO construction works have been delayed by the pandemic.

"The construction of the FPSO has commenced but is delayed due to regulatory constraints imposed by the government of various countries following the COVID-19 pandemic," the company said, without providing the expected delivery date.

"This has affected the work schedule of various sub-contractors operating in countries that manufacture major components for the FPSO.  In addition, this has indirectly affected the timing to secure additional funding for the 98/2 Project," Bumi Armada said.

As a result of these delays, Bumi Armada said Thursday that a notice had been issued to ONGC advising of a “Force Majeure Event” "due to circumstances beyond the control of the associates and subcontractors of the 98/2 Project." 

"The associates remain committed to fulfilling their obligations under the charter contract and are currently in discussion with the charterer regarding the construction timeline, as well as finalizing various components of the funding structure," Bumi Armada said.

According to the World Energy Reports FPSO report released last month, ONGC said in July 2020 that "development of the Cluster-2 region was facing “force majeure challenges” from several vendors due to the Covid-19 outbreak.

Sembcorp Marine said last week that following the relaxation of COVID-19 measures in Singapore since June 2020, the company's Singapore yards began to resume production activities in early July 2020.

"Our operating yard workforce (including sub-contractors) have now increased to almost full workforce levels," the Singaporean shipbuilder said.

Floating Production Week delivers unrivaled overview, insight and analysis to the Offshore Floating Production Systems and Technology market

Floating Production Systems Report And Online Database

  • Annual five year outlook and forecast – At the start of each year we prepare a detailed assessment of future deepwater development and forecast the pace of orders for floating production systems over the next five years. Our 2021 annual report looks at market conditions likely to prevail through 2025 and provides our assessment of which of the 200+ floater projects in the planning queue will reach the final investment decision by end-2025
  • Monthly reports - Our monthly reports provide a detailed snapshot of the business sector as of the middle of each month. More than 100 pages of data and industry analysis each month. Excel spreadsheets with each report enable subscribers to tailor the data presentation to their needs. In our May report we revisit the annual forecast and make revisions as needed.
  • Online database - The online database is updated every day – with information direct from primary sources. In the database are details for 200+planned projects, 390+ installations in service, 40+ floaters on order and 40+ floaters available. The database is fully searchable. Customized charts and spreadsheets can be directly produced from the database. Data are easily exported to excel spreadsheet.
  • Customer support - We are available to assist with technical questions about information in the database and reports -- and assist with any questions about using the database search tools.

Here's what you get!

Request a Demo