Tamarind Taranaki collapse leads to offshore oil field supply company being put into liquidation

Friday, 23 October 2020

The FPSO Umuroa, right, moored near the Tui Oil Field offshore of Taranaki.

Taranaki’s oil and gas industry has been delivered another blow with the company servicing the Tui Oil Field going into liquidation, a flow on from Tamarind Taranaki's collapse.

Norwegian-based BW Offshore have put BWU, a wholly owned subsidiary which operates the floating storage production and offloading vessel (FPSO) Umuroa, into voluntary liquidation after incurring millions of dollars of unsustainable costs.

In a statement, BW Offshore chief executive Marco Beenen said BWU was liquidated to prevent further costs, which had amounted to $US21m ($NZ31.4m) in 2020.

The action stems from the previous owners of the Tui field, Tamarind Taranaki, becoming insolvent in December 2019 after a failed drilling campaign.

Since then, BWU has continued to meet costs to maintain the Umuroa on site but has not received any payments under its contract with Tamarind Taranaki for 12 months.

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The company owning the Umuroa FPSO, above, has been put in voluntary liquidation after incurring $NZ31.4m costs in 2020.

In March 2020 the Government, through the Ministry of Business, Innovation and Employment, took over the role of decommissioning the field and disconnecting the Umuroa, estimated to cost $155m.

Continuous efforts by BWU to reach an agreement over disconnection, and cover costs to stay on site until MBIE was able to start decommissioning forced the liquidation, Beenen said.

'We have assumed responsibilities far beyond the scope of the contract to ensure the safety and integrity of the vessel, and the protection of the environment, pending an agreement with MBIE to move ahead with the FPSO disconnection,” he said in the release.

'We have not been able to reach an agreement with MBIE which provides a viable solution despite significant efforts from our side, which includes offering to plan and execute the disconnection for MBIE at cost and without any profit.

He said it was costing more than $US1m a month to keep the FPSO Umuroa in compliance with regulatory requirements and this cost was expedited to increase over time.

“This is unsustainable for us as a company.'

The Umuroa, a converted oil tanker, is safely moored to the Tui Field, and BW Offshore will work with the liquidators to ensure the safety of the crew and continued care and respect for the environment, the company said.

The Umuroa no longer contained crude oil in the tanks and has a minimum amount of fuel onboard to ensure a safe transition to the liquidators, it said.

BW staff will be deployed within the company while 16 contracted crew will be paid out fully. No staff will suffer loses from the voluntary liquidation, the company said.

As a result of the voluntary liquidation, the liquidators will take control of all the assets and property of the company, and thereafter apply these in satisfaction of BWU's liabilities to its creditors, Beenen said.

“BW Offshore will no longer have control over FPSO Umuroa.

“Consequently, it is expected that remaining net book value of $US21m ($NZ31.4m) on the unit will be written down to zero.”

An MBIE spokesman said while BW Offshore’s announcement was unexpected the Government would work through the implications of the liquidation as it continued to plan and prepare for decommissioning.