This article first appeared in The Edge Financial Daily, on March 9, 2016.

KUALA LUMPUR: Maintaining that the sudden termination of its floating production, storage and offloading (FPSO) contract in the Balnaves field off north-western Australia is not valid, Bumi Armada Bhd said the group will pursue the matter in court.

It told Bursa Malaysia last Friday its wholly-owned subsidiary Armada Balnaves Pte Ltd (ABPL) had received a notice from Woodside Energy Julimar Pty Ltd to terminate the contract in relation to the charter of the Armada Claire vessel.

Replying to queries from the exchange yesterday, Bumi Armada said ABPL intends to fully enforce its rights under the contract, including initiating legal proceedings, against Woodside for the “unlawful purported termination”.

It said the contract is governed by the laws of Western Australia and legal remedies, including damages for breach of contract, will be sought in court.

“It would not be appropriate to provide further comments at this stage,” it said, adding that it will, however, disclose the relevant details at the appropriate time.

According to the company, the Armada Claire has been operating in the Balnaves field since delivering its first oil in August 2014.

“The contract is for an initial fixed term charter of four years expiring in August 2018, with options for four annual extensions, [and] was valued at approximately RM 1.46 billion,” it said, adding that the purported termination is not expected to have any material impact on the operations of the group’s other FPSO vessels.

However, it said last Friday the termination is expected to have an impact on the financial results for the year ending Dec 31, 2016, the extent of which cannot be conclusively ascertained at this juncture as it will depend on the outcome of the legal action against Woodside.