HO CHI MINH CITY: Bumi Armada Bhd and its Vietnam partner Vietsovpetro have sealed a US$700 million (RM2.4 billion) agreement with Vietnam's Hoang Long Joint Operating Co (HLJOC) for the provision of a floating production storage and offloading (FPSO) vessel that will be used in the Te Giac Trang Field Development Project (TGT).

Bumi Armada CEO Hassan Basma said on Friday, Nov 20, the FPSO will have a production capacity of 45,000 barrels of oil per day and one million barrels of storage. The contract includes installation, hook-up and commissioning of the FPSO. Initially for a seven-year period, the contract could be extended on a yearly basis for up to 15 years.

Hassan added Bumi Armada would invest more than “US$300 million over the next 18 months” to get the FPSO ready. This included the cost of purchase and conversion of a Suezmax tanker that will be used as the FPSO. The company’s third FPSO is expected to receive its first oil in 2Q2011.

Financing for the project would be via debt and equity, Hassan said, adding that the FPSO would contribute “significantly” to the company’s revenue by next year.

“We are quite confident of getting the financing,” he said after the signing ceremony between Bumi Armada, Vietsovpetro and HLJOC [which is a partnership involving Petrovietam, Soco International, PTTEP and Opeco] for the provision of the FPSO.

The TGT or White Rhinoceros Field is located off Vietnam, in the Cuu Long Basin some 100km southeast of Vung Tau.

Hassan said the TGT FPSO would be installed in challenging waters that featured a combination of limited water depth and typhoon conditions.

“Our partner, Vietsovpetro will bring maximum local content to the project and they will focus on a variety of areas including the offshore works for FPSO installation at the site, operation and maintenance of the FPSO thereafter,” Hassan said.

On Bumi Armada's plans, Hassab said the company was always bidding for four to five projects annually and the target was to secure at least one or two tenders a year.

“This is a good foothold. So we have aspirations and hope that this segment will continue to grow further,” he said.

He also said there were plans to increase the number of FPSO vessels and expand its fleet of offshore support vessels (OSV).

Bumi Armada is Malaysia’s largest owner and operator of OSVs with a fleet of nearly 50 vessels. Three more OSVs are expected to be delivered in 3Q2010.

The company’s first FPSO, Armada Perkasa, has been operating off Nigeria since March 2008 and it had surpassed the two-million-barrels mark as of early July this year. Its second FPSO, Armada Perdana, is also operating off Nigeria.

On whether the company was mulling a relisting, Hassan said the management was considering the possibilities but this would hinge on the company's needs. The company was delisted on April 18, 2003.

To mark the signing of the agreement Bumi Armada and Vietsovpetro also contributed US$7,000 to students of the Petrovietnam Manpower Training College and US$9,000 to Ho Chi Minh City Vocational Centre for Orphans and Disabled.