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Shell loses Gumusut-Kakap arbitration

Anglo-Dutch supermajor ordered to pay Malaysia's MISC $225 million

Shell has lost an arbitration hearing and will pay Malaysian shipping giant MISC $255 million in a case related to its leased Gumusut-Kakap semi-submersible production platform.

MISC’s subsidiary Gumusut-Kakap Semi-Floating Production System (GKL) filed the arbitration claim last September against Sabah Shell Petroleum for outstanding additional lease rates, payment for completed variation works and other associated costs.

MISC launches arbitration against Shell

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MISC said in a stock exchange announcement the adjudication decision had been issued in its favour and comprised $254,447,464 being the amount due for variation works, plus applicable interest, and costs of 308,634.04 ringgit.

The adjudication decision is binding on both parties, said MISC.

The $254.4 million will be paid by Shell in the form of a higher dayrate over the remaining 23 years of its lease contract, ending in 2039.

The dispute centred on the lease agreement MISC and Shell entered into in 2012 for the construction and lease of the Gumusut-Kakap semisub which operates on Shell’s Gumusut-Kakap project.

The production unit has operated at the field under the terms of the original contract during the arbitration period, and Shell has paid the lease rates all along.