Bumi Armada venture secures extension for key FPSO contract worth over $40 million

A joint venture between Malaysian offshore contractor Bumi Armada and India’s Shapoorji Pallonji Energy (SP Energy) has secured an extension for a key floating production, storage and offloading vessel from state-owned Oil & Natural Gas Corporation (ONGC) for its Cluster 7 field, off India’s western coast.

Bumi confirmed the extension award on Friday and said it has “received notification from ONGC of India, about its intention to extend the charter hire of an FPSO (Armada Sterling II) for one year from the expiry of the present firm time-charter”.

“The value of the contract extension is approximately $43 million,” it stated.

The joint venture, SP Armada Oil Exploration Private Limited, entered into an initial nine-year charter term with ONGC in 2013, with the original charter likely to expire on 7 March 2024, it said.

The contract also enables up to seven annual extension options for the FPSO vessel.

The Malaysian contractor said the “contract extension is expected to contribute positively to the future earnings of Bumi Armada Group”.

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SP Energy has a majority shareholding in the joint venture with 51% plus one share, with Bumi holding the balance equity of 49% minus one share, it added.

ONGC’s Cluster 7 field is located about 210 kilometres off the west coast of Mumbai and is one of India’s key producing oil and gas fields.

The joint venture is also close to commissioning a sizeable FPSO for ONGC, involving the Cluster 2 development in the prolific KG-DWN-98/2 deep-water asset offshore Kakinadas.