Seatrium's (SGX:5E2) subsidiary, Jurong Shipyard, commenced arbitration proceedings against Petrobras Netherlands, for failure to pay a close-out payment in connection with a P-54 FPSO contract, according to a Tuesday filing with the Singapore Exchange.

Jurong has a claim of a close-out sum of $152.3 million in connection with a settlement agreement it had with Petrobras in 2008.

The audit process of the P-54 contract was initiated by the Brazilian Federal Court of Accounts in 2007 and in 2008, the two parties agreed to a settlement where Pertrobras agreed to pay Jurong the close-out sum.

An amount of $55.7 million was withheld by the Tribunal Contas da Uniao ahead of a final decision.

Following a decision by the Brazilian authorities in November 2023, Petrobras retained the withheld amount, with its parent company, Petroleo Brasileiro, issuing a demand letter to Jurgon, where it claimed around $135.3 million in alleged overpayments.

After deducting the $55.7 million withheld under the settlement agreement, Petrobras demand a payment of $79.6 million.

This has prompted Jurong to commence arbitration to claim payment of the withheld amount under the settlement agreement, with Jurong alleging that Petrobras breached the settlement agreement by failing to pay the close-out payment.