Sembcorp Cogen obtains court order to secure gasoil stored at Hin Leong's terminal

Singapore

SEMBCORP Industries' (SCI's) wholly-owned power generation subsidiary Sembcorp Cogen has secured an order from the Singapore High Court to restrain Universal Terminal from moving, removing or disposing of any gasoil reserves designated for the subsidiary.

Under the court order obtained on April 24, the oil storage terminal - co-owned by debt-hit giant oil trader Hin Leong Trading (HLT) and located on Singapore's Jurong Island - is also required to ensure the designated gasoil reserves are stored separately from any other gasoil.

There is a possibility that the gasoil reserves designated for Sembcorp Cogen may be subject to competing claims by one or more third parties, SCI said on Monday. Sembcorp Cogen has commenced legal proceedings in the High Court to assert its ownership of these reserves.

The carrying book value of the gasoil reserves that Sembcorp Cogen has stored with HLT stood at S$94 million as at Dec 31, 2019.

The court order was obtained days after SCI said on April 22 that the power generation unit has scrapped a more than decade-old gasoil supply and storage (GSS) deal with HLT to safeguard its interest.

Under the GSS agreement, the trading firm sold gasoil reserves to Sembcorp Cogen, and stored and managed them on the latter's behalf, to fulfil certain regulatory requirements under Sembcorp Cogen's electricity generation licence.

Court documents filed on April 17 for HLT's moratorium order revealed that SCI had issued a notice to the trading firm demanding that the cargo (gasoil) not be discharged and that its inventory is consolidated into dedicated tanks and demarcated.

The Business Times reported last week that HLT has since withdrawn its application for the debt moratorium and decided to file for judicial management instead. The firm is grappling with a debt pile of some US$4 billion.

Universal Terminal is 41 per cent owned by the family of Hin Leong founder Lim Oon Kuin, popularly known as OK Lim. China's oil giant

PetroChina and Australia's Macquarie Asia Infrastructure Fund own the remaining 25 per cent and 34 per cent stake, respectively.

Oil giants Vitol and China's state-run Sinopec are among several industry titans eyeing a stake in the oil storage terminal, BT reported on April 24.

SCI's energy (utilities) business is still the main pillar of support for the group, which operates across the energy, water, marine and urban development sectors.

Its earnings for fiscal 2019 was supported by the energy business, in which underlying profit grew 12 per cent to S$360 million, according to an OCBC Investment Research note on Monday.

SCI shares closed at S$1.55 on Monday, up S$0.05 or 3.3 per cent.

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