Seatrium, through its wholly owned subsidiary Jurong Shipyard, has initiated arbitration proceedings against Petrobras Netherlands in connection with a legacy contract for the conversion of the P-54 floating production, storage and offloading vessel (FPSO). The dispute relates to a settlement agreement reached in 2008 following amendments to the original 2004 contract.
7 million was withheld pending a final decision by Brazil’s Federal Court of Accounts. Seatrium stated that the Brazilian court issued its final decision in November 2023, removing the basis for withholding the payment, but the amount has not been released.
Jurong Shipyard has therefore initiated arbitration seeking recovery of the withheld funds and asserting that Petrobras Netherlands is in breach of the settlement agreement. 6 million after deducting the withheld amount.
The arbitration, to be conducted in London under UNCITRAL rules and governed by English law, is intended to secure payment of the withheld funds and address claims related to the P-54 contract, Seatrium said. The P-54 FPSO is deployed at Roncador field, the largest offshore discovery in Brazil in the 1990s and currently has a production potential of nearly 150,000 barrels of oil equivalent per day.
It is also the largest producing field outside the Brazilian pre-salt area, with approximately 10 billion barrels of oil equivalent originally in the reservoir. It is operated by Petrobras (75%), in partnership with Equinor (25%), and in addition to P-43, it has three other production units P-52, P-55, and P-62.
This arbitration highlights the complexities of legacy contracts and the challenges of recovering withheld funds. The fact that Petrobras Netherlands is disputing the payment suggests that there may be deeper issues at play, which will need to be resolved through this arbitration.
