Petrofac ends Petronas risk contract early; to incur small charge

Petrofac said it has reached agreement with its partners to end the Berantai risk service contract (RSC) in Malaysia, adding that it would incur a “small” impairment charge as a result.

Petrofac said the receivable due under the contract at the end of 2015 was $357m. The company and its partners, Kencana Energy Sdn Bhd and Sapura Energy Ventures Sdn Bhd, have now reached a mutual agreement with Malaysia's Petronas to end the contract from 30 September 2016.

Petronas will reimburse the balance outstanding capital and operational expenditure to Petrofac and its partners up to June 2017.

The RSC was the first awarded by Petronas to Petrofac and its two local partners in 2011. Since then it has co-invested in the development of the Berantai field and been responsible for its operation and maintenance. Petrofac will use the cash proceeds for general corporate purposes.

As part of the original agreement, Petronas could elect to end the RSC early, ahead of the scheduled end date of 2020, depending upon the economics of the project.

Petronas will take ownership of the floating production, storage and offloading vessel being used for the project.