Keppel rejects Awilco’s contract termination
Following Awilco Drilling’s cancellation of a rig construction contract with Keppel due to alleged breaches of the contract, Keppel has denied the allegations and rejected the termination.
Awilco ordered a semi-submersible drilling rig of a Moss Maritime CS60 Eco MW design from Keppel in March 2018.
The rig, named Nordic Winter, was scheduled for delivery in 1Q 2021. The order was worth about $425 million.
However, Awilco on Monday said it had cancelled the order due to “breaches of the contract”.
Responding to Awilco’s cancellation, Keppel said on Tuesday that Awilco cited certain breaches relating to the project management, schedule, resourcing and compliance.
According to Keppel, the notice of termination came shortly before the next payment instalment of $31.875 million due from Awilco under the contract on 9 June 2020, which was previously deferred in March 2020 at Awilco’s request.
Under the terms of the contract, an effective termination of the contract by Awilco might entitle it to the return of payments already made (approximately $54 million) with interest, or to pay for the work done by Keppel FELS and take over the rig.
Keppel FELS denies the allegations by Awilco and has rejected the purported termination of the contract.
Keppel FELS is currently considering its legal options and evaluating potential financial impact in consultation with its advisors.
Keppel FELS has further reserved all its rights under the contract, including the right to retain the instalments already received and to seek compensation for the work done to date in the event that Awilco defaults in the payment of the 9 June Instalment.
Keppel is building one more rig of the same design for Awilco and Awilco also has rig independent options for two additional rigs of the same design for delivery in 1Q 2023 and 2024, respectively.