Rig Remains Submerged After Incident

The Naga 7 rig remains submerged off the coast of Sarawak after an incident that took place on May 3, Velesto Energy revealed in its latest quarterly report, which was published last week.

In the report, the company noted that the incident area was secured while the group works with insurance underwriters and the Protection & Indemnity (P&I) Club on “the way forward”. Velesto Energy said the rig and other related liabilities are adequately covered under the Hull & Machinery (H&M) insurance and the P&I Club, respectively.

Progressing on the insurance claims, on May 31, Velesto Drilling Sdn. Bhd, as the insured under the H&M policy, issued a notice of abandonment of the submerged rig to the H&M insurers, pursuant to the H&M policy, Velesto Energy outlined. The company said it was currently awaiting its response.

Velesto Energy did not immediately respond to an email from Rigzone asking when it expected to receive a response.

In its latest quarterly report, Velesto Energy confirmed that the incident involving the Naga 7 rig occurred  due to the penetration of one of its legs into a soil formation while jacking up at the Salam-3 well off the coast of Sarawak for ConocoPhillips Sarawak. The rig is said to have tilted and subsequently submerged at the location on May 4. All 101 personnel on board were safely transferred to shore and all the relevant authorities were duly informed, Velesto Energy confirmed.

In its annual report posted on May 28, Velesto Energy highlighted that the Naga 7 incident location was being monitored for security and any potential adverse impact. The company’s president, Rohaizad Darus, referenced the incident in the annual filing.

“While I am proud of the achievements in 2020, I wish to reference the unfortunate incident involving Naga 7 on 3 May 2021 causing the rig to be fully submerged,” he stated in the report. “We believe our HSE drills and preparation have contributed to the safety of our crew … The group is investigating the incident and evaluating recovery options,” he added.

Velesto Energy registered earnings before interest, tax, depreciation, and amortization (EBITDA) of $70.9 million (RM293 million) in 2020, which marked a 12 percent drop year on year, the company revealed in its 2020 annual report. Excluding asset impairment and accelerated depreciation, the company’s drilling services segment posted a profit before tax of $9.4 million (RM39 million), despite reduced rig utilization rates and revenue recognition, the company revealed.

Velesto Energy is a Malaysia based multinational provider of drilling for the upstream sector of the oil and gas industry, which was formerly known as UMW Oil & Gas Corporation Berhad. Its wholly owned rig fleet comprises the Naga 2, Naga 3, Naga 4, Naga 5, Naga 6, Naga 7, and Naga 8 jack-up drilling rigs.

To contact the author, email andreas.exarheas@rigzone.com