MISC has reported a first-quarter loss of MYR 1.16bn ($267.7m) — its first in eight years — as it made a provision for litigation claims.
Last month, Sabah Shell Petroleum Co (SSPC) was awarded MYR 1.46bn in arbitration with a subsidiary of MISC over defective works related to the Gumusut-Kakap semi-floating production system (semi-FPS).
MISC also made a write-off of trade receivables and loss on remeasurement of finance lease receivables that amounted to MYR 935.2m, following the award announced by the arbitral tribunal.
It said it has been advised that it has “legal merits” to challenge the award and said it intends to pursue an application to set aside a substantial portion of the claims awarded to SSPC.
It added that it was “surprised and dismayed by the unexpected outcome of the award”, and that it is determined to “rigorously challenge” the tribunal’s decision.
Revenue for the quarter was up 10.4% on a year ago to MYR 2.5bn, with higher contributions from all segments except for offshore.
Higher earning days brought about by lower dry-docking activities contributed to an increase in LNG’s revenue of MYR 70.5m, while improved freight rates in the tanker segment helped increase revenue by MYR 54.3m.
MISC’s heavy engineering segment reported a rise in revenue of MYR 143.7m following higher contribution from ongoing projects coupled with increased conversion work.
“We began 2020 full of optimism as we ushered in the new year, with AET, our wholly-owned petroleum shipping subsidiary, securing new long-term charter projects for the Brazilian market,” MISC chief executive Yee Yang Chien said.
“This success was followed by AET securing time charters for the world’s first LNG dual-fuel VLCCs.
“Unfortunately, the world was not prepared to deal with the double threat of the collapse in oil price and the economic fallout from the global Covid-19 pandemic.
“We are fortunate and thankful that our shipping and floating production businesses are deemed essential services and we have been able to continue operating.”
