KUALA LUMPUR (Nov 29): Yinson Holdings Bhd said its associate company Yinson Energy Sdn Bhd intends to take over the Layang floating production storage and offloading (FPSO) project, after TH Heavy Engineering Bhd (THHE) applied to the Kuala Lumpur High Court for leave to novate the project.
In a filing with Bursa Malaysia, Yinson said Yinson Energy has affirmed affidavits and extended copies to the High Court with regard to the application made by THHE for leave to enter into and complete a proposed novation of the contract for provision of engineering, procurement, construction, installation and commissioning (EPCIC) and leasing for Layang FPSO facilities on Nov 27, 2014, to Yinson Energy.
The charter contract — which is for EPCIC and leasing of a floating production storage and offloading facility to be deployed at the Layang field in Block SK10, offshore Miri, Sarawak — was initially made between JX Nippon Oil & Gas Exploration (Malaysia) Ltd and THHE.
On Oct 30, THHE announced it was still in discussions with Yinson and JX Nippon on Yinson's plan to take over THHE's FPSO vessel charter agreement with JX Nippon.
This came on the heels of an earlier news report by The Edge Malaysia, in which THHE was reported to be in negotiations with Yinson to sell its FPSO unit.
"The affidavits confirm Yinson Energy's position that it has no objections to the aforesaid application made by THHE, subject to finalisation of the terms of the proposed novation by the parties thereto and/or required by any regulatory authority (if any) and that the proceeds of the proposed novation (being consideration payable by Yinson Energy to THHE for the novation of the Charter Contract) to be set aside and kept in a specific account to be dealt with in pursuance of such orders made by the court," Yinson said.
The parties, Yinson said, are now in the midst of finalising the other terms of the proposed novation, and the application by THHE has been fixed for case management.
Meanwhile in a separate statement, Yinson executive director and chief executive officer Lim Chern Yuan said this development will "open many doors for the group if it happens", as the project would continue to enhance Yinson's footprint in Asia and signals its entry into Malaysia.
"We are confident that this is the right project for Yinson which will further boost our orderbook and in line with our corporate strategy. We are also confident that we can deliver the FPSO safely, on time and on budget," Lim said.
"Coming off from the disposal of a strategic stake in FPSO John Agyekum Kufuor to a consortium of Japanese companies, this prospect of working with [JX] Nippon will further enhance the group's standing amongst Japanese corporates," he added.
According to Lim, Yinson could be deploying its 51%-owned FPSO Four Rainbow, which has a storage capacity of 600,000 barrels based on its annual report, for the Layang FPSO project.
"We believe our FPSO Four Rainbow is the right candidate for this project and Yinson has the financial and human capital to execute this project. At the same time, we must caution that the filing of the affidavit is just the start of the process and pending the court order, we remain in discussions with the other parties to fine tune the terms of the novation," Lim said.
Yinson settled 1% or four sen lower at RM3.86, valuing the group at RM4.2 billion.