Marco Polo breaks off rig construction deal with Sembcorp Marine
- Business & Finance
Marco Polo Drilling (MP Drilling) on Tuesday terminated a newbuild rig construction contract with Sembcorp Marine’s subsidiary PPL Shipyard.
MP Drilling entered into a rig construction contract with PPL Shipyard in February 2014. The contract for a high-spec jack-up drilling rig was worth $214.3 million and the rig was scheduled for delivery in the fourth quarter of 2015.
On Tuesday, MP Drilling issued PPL with a termination notice for the rig construction due to, as the company said, PPL’s failure to comply with certain of its material contractual obligations.
MP Drilling explained: “In arriving at this decision to terminate the rig construction contract, MP Drilling has taken into account various factors including cracks found on all three legs of the new rig during two rounds of tests, notwithstanding repair works carried out by PPL after the first round of tests.”
MP Drilling said it would not take the delivery of the rig and it would seek refund from PPL of the initial amount of 10% of the contract price (approximately $21.4 million) previously made to PPL pursuant to the rig construction contract together with interest.
On the other hand, PPL Shipyard claims it has not received any notice of termination of the construction contract at the time they learnt of the announcement.
In its press release on Wednesday, the shipyard said it disagreed with the allegations in the announcement. In addition, the shipyard said it would regard this as repudiatory breach of the contract, and would terminate the contract and claim amounts due under the contract against MP Drilling and its guarantor Marco Polo Marine Ltd.
Offshore Energy Today Staff