Petronas, HHI to sign US$1.1 bln novation agreement with MISC

Petronas and Hyundai Heavy Industries Co Ltd (HHI) have agreed to enter into a novation agreement with MISC Bhd that will involve an expenditure of about US$1.1 billion.

The agreement is for the novation of Shipbuilding Contracts (SBCs) between Petronas and HHI to the shipping company, for the construction and delivery of new LNG carriers (Newbuild LNGCs).

In conjunction with the novation agreement, Petronas via its indirect subsidiary Petronas LNG Sdn Bhd (PLSB) has also agreed to enter into Time Charter Parties (TCPs) for the charter of the Newbuild LNGCs.

In a statement to Bursa Malaysia, MISC said that pursuant to the novation agreement, MISC will be bound by the obligations as stipulated in the SBCs.

The Newbuild LNGCs are expected to be delivered to MISC from September 2016 to December 2017, it said.

MISC said the TCPs are for 15 firm years for each vessel commencing upon delivery of the Newbuild LNGCs to PLSB, and will have a charterer’s option for extension for another five years.

On a separate transaction, MISC announced that PLSB has agreed to extend the charter of five refurbished Puteri Class LNG Carriers on a time charter basis for another 10 years for each refurbished LNG Carrier.

The respective charters shall commence from the date of delivery of each refurbished vessel to PLSB, which are expected to be from September 2015 to September 2017.

Korea-based HHI is principally involved in the business activities of shipbuilding, offshore, industrial plant engineering and machinery, electro electrical systems, green technology and construction equipment.