MISC Annual Report 2019

41. JOINT ARRANGEMENTS AND ACTIVITIES (CONT’D.) (a) Joint ventures and activities (cont’d.) Effective interest Country of Principal held (%) Name of company incorporation activities 2019 2018 Brazilian Deepwater Bermuda Construction of FPSO 49 49 Floating Terminals Ltd. *** Brazilian Deepwater Bermuda Chartering of FPSO 49 49 Production Ltd. *** Brazilian Deepwater Production Bermuda Operation and maintenance of FPSO 49 49 Contractors Ltd. *** MISC Shipping United Arab Dormant 49 49 Services (UAE) LLC *** Emirates Western Pacific Bermuda Providing shipping solutions for LNG project 60 60 Shipping Ltd. **** requirements and other general shipping requirements of Papua New Guinea ELS Lightering Uruguay Lightering activity 50 50 Services S.A. **** Malaysia Deepwater Floating Malaysia FPSO owner 51 51 Terminal (Kikeh) Ltd. **** Malaysia Deepwater Malaysia Operating and maintaining FPSO terminal 51 51 Production Contractors Sdn. Bhd. **** Diamond LNG The Bahamas Owning, chartering and operating of vessel 25.5 – Shipping 6 Ltd. *** Future Horizon (L) Malaysia Carrying on LNG carriage and 51 – Pte. Ltd. **** LNG bunkering operations *** Even though the Group holds less than 50% equity interest in these companies, all material operational and financial matters require unanimous consent of the joint venture parties. **** Even though the Group holds 50% or more than 50% equity interest in these companies, all material operational and financial matters require unanimous consent of the joint venture parties. 41. JOINT ARRANGEMENTS AND ACTIVITIES (CONT’D.) (b) Joint operations Details of the Group’s joint operations are as follows: Name Effective interest held by the Group (%) 2019 2018 Technip MMHE (Malikai) 33 33 Joint Venture Technip MMHE (SK316) 33 33 Joint Venture Technip MMHE (Kasawari) 40 – Joint Venture Technip MMHE (Malikai) Joint Venture, Technip MMHE (SK316) Joint Venture and Technip MMHE (Kasawari) Joint Venture are unincorporated joint ventures between the subsidiary, MMHE and Technip Geoproduction (M) Sdn. Bhd. to undertake specific engineering, procurement and construction, installation and commissioning projects. 42. SIGNIFICANT EVENTS Material litigation (i) Gumusut-Kakap Semi-Floating Production System (L) Limited (“GKL”) and Sabah Shell Petroleum Limited (“SSPC”) On 9 November 2012, MISC’s wholly-owned subsidiary, GKL entered into a Semi FPS Lease Agreement with SSPC, a wholly-owned subsidiary of Shell, for the construction and lease of Gumusut-Kakap Semi Floating Production System (“Semi-FPS”) for the purposes of the production of crude oil (“the Contract”). On 2 September 2016, GKL filed a Notice of Arbitration dated 2 September 2016 with the Kuala Lumpur Regional Centre for Arbitration (now known as Asian International Arbitration Centre) to commence arbitration proceedings against SSPC (“Arbitration”) whereby GKL is claiming for outstanding additional lease rates, payment for completed variation works and other associated costs under the Contract from SSPC, which covers the following: i The total sum of approximately USD245.0 million and applicable interest at any rate deemed fit by the tribunal/adjudicator; ii Declaratory relief; iii The costs of the arbitration/adjudication; and iv Any further or other awards as the tribunal/adjudicator deems fit. In addition, GKL filed Notices of Adjudication against SSPC under the Construction Industry Payment and Adjudication Act 2012, resulting with GKL being successful under the First and Second Adjudication Decisions for payment of completed variation works amounting to approximately USD255 million and USD10.9 million respectively. A total of approximately USD73 million of outstanding increased Day Rates has been paid by SSPC as lump sum payments, with the balance amounts payable by SSPC as increased Day Rates for the relevant lease period. NOTES TO THE FINANCIAL STATEMENTS 31 December 2019 NOTES TO THE FINANCIAL STATEMENTS 31 December 2019 FINANCIAL STATEMENTS MISC BERHAD PEOPLE. PASSION. POSSIBILITIES ANNUAL REPORT 2019 370 371