Page 9 - AfrOil Week 36 2019
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AfrOil POLICY AfrOil
The court postponed oral proceedings in response to the Kenyan government’s request for more time to assemble a new legal team to defend itself against Somalia’s allegations.
Nairobi had asked the ICJ to delay the hear- ing for 12 months, but the court’s registrar, Philippe Gautier, only authorised a two-month postponement. He also criticised the Kenyan side for making the request, expressing his “deep regret regarding this last-minute request, which has caused undue effect on the adminis- tration of the judicial work of the court.”
Somalia’s government hopes to convince the
court that the disputed blocks lie within its own territory, citing Article 15 of the United Nations Convention of the Law of the Sea (UNCLOS) as a basis for its claim. Kenya, however, has said that it was already exercising jurisdiction over the area in question when that convention took effect in 1982.
The stakes in the dispute are high, and not just because this section of the Indian Ocean could contain oil or gas. In the event that the ICJ grants Somalia’s request to extend its mari- time border, Kenya could find its access to open waters limited.
PROJECTS & COMPANIES
Nigeria’s CESL arranges to buy Armada Perdana FPSO from Malaysian company
MALAYSIA’S Bumi Armada said last week that it had arranged to sell a floating production, storage and offloading (FPSO) unit to Century Energy Services Ltd (CESL) of Nigeria.
In a stock exchange filing, Bumi Armada stated that the Nigerian company had agreed to pay its subsidiary Armada Oyo $40mn for the FPSO, known as the Armada Perdana. CESL intends to move the vessel from its current loca- tion at the Oyo field to another offshore licence area, it noted.
The Malaysian company did not provide any further operational details about CESL’s plans. But it did report that the Nigerian firm had already paid $4.5mn towards the required deposit of $5.5mn on the FPSO and would remit the remaining $1mn before the end of 2019.
“To secure the unpaid portion of the pur- chase price, Bumi Armada will hold a mort- gage over the Armada Perdana FPSO,” the stock exchange filing added. “The group will recog- nise the unpaid portion of the purchase price as and when funds are received from CESL.”
Bumi Armada further stated that the Nige- rian company had agreed to pay another $5mn towards the purchase price within six months of taking delivery of the FPSO, or when it began
producing oil at the new site, plus another $17.9 mn within two years after reaching the mile- stone of first oil. Additionally, it said that the purchase price would be offset by any addi- tional expenses incurred by the FPSO between August 1, 2019 and the date of delivery.
The Malaysian company deployed the Armada Perdana FPSO to the Oyo field in 2008. But in June 2017 it suspended development activities, citing the Nigerian company’s failure to make regular payments for its services.
Subsequently, it did continue to allow oil to flow from production wells into the vessel and permitted the field’s operator, Erin Petro- leum Nigeria, to offload a single cargo of crude. Nevertheless, it had no choice but to halt work entirely in April 2018, when it received a dec- laration of force majeure from the Nigerian firm and was ordered to turn over all the oil extracted from Oyo and stored in the FPSO.
Several months later, Nigerian authorities informed Bumi Armada that Abuja intended to sell off all the crude contained in the vessel and had appointed a manager to oversee the trans- action. They said they would set aside a portion of the proceeds from the sale to compensate the Malaysian company for part of the sum still owed by Erin Petroleum Nigeria.
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Week 36 10•September•2019 w w w . N E W S B A S E . c o m
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