BW Offshore’s FPSO Stuck in New Zealand

The Umuroa FPSO has remained stuck at the Tui field in New Zealand following the contract termination, client liquidation, and intervention from the country’s court and environment regulator.

FPSO-leasing company BW Offshore  was told in October 2019 by the client Tamarind Taranaki (TTL), a subsidiary of Tamarind Resource, that the FPSO contract would not be extended after December 31st 2019.

BW Offshore then said it would undertake work to disconnect and demobilize the FPSO, expecting to disconnect from the field and sail away to Singapore by the end of March.

However, before removing the vessel, BW Offshore needed to disconnect it from Tamarind’s equipment on the seafloor, and the environment protection regulators wanted all of this subsea equipment to be removed as well, something which BW Offshore said was the responsibility of Tamarind, which is now insolvent.

In an update on Friday April 10th, BW Offshore said the FPSO was still at the field location, because a court ruling had prevented the company from removing the vessel under the previously agreed rule. The risers on the seabed needed to be removed now. BW Offshore said that this was the responsibility of Tamarind, meaning the FPSO is unable to move at the moment.

BW Offshore  said that it had commenced discussions with regulatory agencies regarding disconnection in accordance with a 2017 ruling of the Environmental Protection Authority 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.”

BW Offshore asserted that the best and safest approach for disconnection would be 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 BW Offshore said was Tamarind’s responsibility.

In March 2020, the EPA imposed abatement notices to prevent BW Offshore from disconnecting the risers under the 2017 Ruling. It said that circumstances had 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. However, the EPA appealed this decision and on April 6th the High Court of New Zealand decided that the abatement notices should remain in place.

The High Court’s Justice Cooke agreed with the EPA that the EEZ Act was not concerned with who legally owned the equipment. “It is only concerned with the effect of those activities on the environment and existing interests,” he said.

BW Offshore said in response that it was taking advice on whether to appeal the High Court decision, which it claimed contained “certain inaccurate statements and gives the impression that BW Offshore was in a partnership or joint venture with TTL”. BW Offshore said that this was not the case. “BW Offshore was a service contractor to TTL and has no ownership interest in the field”.

BW Offshore concluded by saying that “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.” It noted that “a significant portion of the estimated US$20m demobilization cost has been incurred to date as preparatory work has been done and support vessels for demobilization had been mobilized prior to abatement notices being imposed by the EPA”.