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New Zealand: BW Offshore reports problem disconnecting the FPSO Umuroa from the Tui field

10 Apr 2020

Photo - see caption

With reference to stock exchange releases dated 14 October 2019 and 31 October 2019 related to the termination notice from Tamarind Taranaki Limited (TTL) for the FPSO Umuroa operating on the Tui field offshore New Zealand.

BW Offshore has as of 9 April 2020 not been able to disconnect the FPSO Umuroa from the Tui field. The Company has previously communicated it expected to disconnect from the field and sail away to Singapore by the end of March.

Following the termination of the FPSO lease and operate contract, due to the liquidation of the operator of the Tui field, Tamarind Taranaki, following an expensive and unsuccessful drilling campaign, BW Offshore began preparatory work to start demobilisation. In October 2019, BW Offshore commenced discussions with regulatory agencies regarding disconnection in accordance with a 2017 ruling (2017 Ruling) of the Environmental Protection Authority (EPA) of New Zealand. The 2017 Ruling allows lay down of risers on the seabed for the FPSO to safely disconnect and sail away. The risers are the responsibility and property of TTL. BW Offshore have no responsibility related to this equipment. TTL is insolvent and in liquidation and is currently not able to execute disconnection activities as per the Charter Contract.

Photo - see caption
FPSO Umuroa (Source: BW Offshore)

The Company considers that the best and safest approach for disconnection is to follow the procedure in the 2017 Ruling and cap and lay down the risers on the seabed pending removal of the risers as part of full field decommissioning (which is not a BW Offshore responsibility). In March 2020, the EPA imposed abatement notices to prevent BW Offshore from disconnecting the risers in accordance with the 2017 Ruling on the basis that circumstances have changed since the 2017 Ruling was granted. BW Offshore challenged the imposition of the abatement notices in the Environment Court and the court lifted these notices. The EPA appealed this decision and on 6 April the High Court of New Zealand decided that the abatement notices should remain in place.

The Company is taking advice on whether to appeal the recent High Court decision which contains certain inaccurate statements and gives the impression that BW Offshore was in a partnership or joint venture with TTL. This is not the case. BW Offshore was a service contractor to TTL and has no ownership interest in the field.

Due to uncertainty whether BW Offshore may disconnect using the 2017 Ruling, combined with the COVID-19 situation and the onset of the southern hemisphere winter, the Company has decided to plan a for lay-up of the unit on the field until further clarification can be received from authorities.

BW Offshore will continue to work with the New Zealand authorities to develop a new plan for demobilisation.

A significant portion of the estimated USD 20 million demobilisation cost has been incurred to date as preparatory work has been done and support vessels for demobilisation had been mobilised prior to abatement notices being imposed by the EPA.

Original article link

Source: BW Offshore

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