23 Oct 2020

Offshore oil field supply company goes into liquidation

6:14 pm on 23 October 2020

The owner of the floating oil and gas production vessel Umuroa - which has gone into voluntary liquidation - says it was necessary to stop it haemorrhaging money.

Tamarind Resources' FPSO Umuroa off the Taranaki coast.

Tamarind Resources' FPSO Umuroa off the Taranaki coast. Photo: Tamarind Resources

It is regarded as another setback for the Taranaki oil and gas sector.

The Umuroa is a floating production station attached to the ill-fated Tui Oil Field which was abandoned by Tamarind Taranaki in December leaving taxpayers facing a bill of at least $155 million to decommission the site.

Tamarind Taranaki went into receivership just before Christmas after its $300 million offshore drilling campaign at the Tui oil field failed. It owes creditors about $484m.

BWU is a wholly owned subsidiary of Norwegian-based BW Offshore.

Chief financial officer Ståle Andreassen said it had cost $31m to have the vessel at Tui this year while it has missed out on $46m in potential earnings.

He said BW Offshore has tried to cut a deal with the Ministry of Business, Innovation and Employment - which now operates Tui - but with no success.

"We were only asking for costs of this - we just can't sink any more money into this."

Further complicating things, the Environmental Protection Authority served an abatement notice on BW Offshore preventing the Umuroa from leaving the Tui Field.

That decision was overturned in the Environment Court this week, but Andreassen fears it may be appealed anyhow.

"We are not going to try again but either way we just can't take another bet betting another $15 to $20 million... It is just not sustainable for us."

Andreassen said BW Offshore will work with the liquidators to ensure the safety of the Umuroa's crew, the integrity of the vessel, and the continued care for the environment.

He said it will now be up to the liquidators to work with MBIE on decommissioning the Tui field.

Not a surprise

Until a week ago Jonathan Young was New Plymouth MP and the National Party's energy and resources spokesperson.

He said the announcement should not come as a surprise.

"It's very sad that this has happened because what we want to have is an end-to-end process to decommission that field and see the Umuroa depart from Taranaki waters in an orderly fashion and that looks just a lot more problematic now."

Young said the industry and wider community will be feeling unsettled about the decommissioning of the Tui.

"Unnerving and probably frustrating I would say because there's many people in the sector who have the skills to undertake this work and there's been a very long process around identifying that and I do think the longer it takes the more expensive it will be for the taxpayer."

New Plymouth mayor Neil Holdom doesn't think it is a blow to the local economy.

"Our key concern first is the environmental risk and I don't think this announcement changes anything.

"Then there's the concern about impact on local businesses and it's clear that BW Offshore has indicated there won't be a financial impact on local organisations so we're not going to see people lose jobs."

Holdom reckons MBIE and now the liquidator just need to get on with job and get the work done over summer.

Meanwhile, BW Offshore's Ståle Andreassen is left smarting over being left as the meat in the sandwich.

"Of course we're angry at Tamarind and the whole situation. They're the ones who've been running away from the whole thing and if you ask me are quite irresponsible."

As for the authorities: "We're disappointed that we haven't been able to find a solution," Andreassen said.

He added that BW Offshore's 12 staff on board will be redeployed and the business will cover the costs of 16 contractors until the decommissioning of Tui is complete.

MBIE said it is surprised by BWU's liquidation and is still working through its implications.

The ministry said it remains committed to the safe decommissioning of the Tui Field.

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