Seatrium contests Petrobras counter-claim of $107.5m in P-54 vessel conversion case

The dispute concerns a 2004 contract for the conversion of the P-54 floating production storage and offloading unit.

Jurong Shipyard Pte Ltd (JSPL), a wholly-owned subsidiary of Seatrium Limited, has started arbitration proceedings against Petrobras Netherlands B.V. (PNBV).

The dispute concerns a 2004 contract for the conversion of the P-54 floating production storage and offloading (FPSO) unit, Seatrium said in a statement.

The contract was amended in 2006 and 2007 to reflect foreign exchange movements and increased costs.

In 2008, JSPL and PNBV entered a settlement agreement under which PNBV agreed to pay JSPL $205.6m (US$152.3m), with $75.2m (US$55.7m) withheld pending a decision by Brazil’s Tribunal de Contas da União (TCU).

JSPL retained the right to claim the withheld amount through arbitration, according to Seatrium. In November 2023, however, the tribunal in Brazil issued its final decision, removing the original basis for withholding $75.2m (US$55.7m).

PNBV has continued to retain the funds, and its parent company Petrobras demanded $107.5m (US$79.6m) in alleged overpayments, after deducting the withheld sum, the company added.

JSPL has initiated arbitration in London under UNCITRAL rules, governed by English law, to claim the withheld amount and prevent further recovery attempts by PNBV, Seatrium said.

Seatrium stated it has no balance sheet exposure to the $75.2m (US$55.7m), and no provision has been made. The company added that the financial impact will depend on the outcome of the arbitration.

The P-54 arbitration follows previous cases involving the P-52 project in which JSPL engaged in arbitration with Petrobras/PNBV.

Seatrium stated it will provide updates if there are material developments in the proceedings.

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