Hyundai Heavy, Fred. Olsen Energy in arbitration over cancelled rig deal
- Exploration & Production
Fred. Olsen Energy has informed that its dispute with Hyundai Heavy Industries (HHI) regarding a contract for the design and construction of a semi-submersible drilling rig Bollsta Dolphin is subject to arbitral proceedings.
In October 2015, South Korea’s rig builder Hyundai Heavy asked for more time and money from Fred. Olsen Energy to complete building the rig. Days later, Fred. Olsen Energy terminated the contract with Hyundai as a result of delay in delivery.
Fred. Olsen Energy said on Wednesday that, as part of these proceedings, Bollsta has received HHI’s quantification of their claim that Bollsta Dolphin, a wholly owned subsidiary of Fred. Olsen Energy, was not entitled to cancel the contract.
In addition to claiming entitlement to the first instalment, Fred. Olsen Energy said that HHI claimed an additional payment of about $178 million. An alternative claim of $38 million has been submitted by HHI should their primary claim fail, the company added.
The contract with HHI to build the rig was signed on May 25, 2012 and fabrication started in June 2013. By March 31, 2015 the rig should have been completed and delivered, Fred. Olsen emphasized.
Seven months thereafter, Fred. Olsen Energy said, with no realistic prospect of completion before May 2016, Bollsta cancelled the contract. Variations to the work were of minimal consequences to the yard.
“Bollsta, together with Fred. Olsen Energy, remain firm that the cancellation was rightful, that Bollsta is entitled to a full repayment of the first instalment (of about $186M) and that none of HHI’s claims holds any merit; they will all be vigorously refuted,” Fred. Olsen Energy concluded.