Prosafe-Westcon dispute over cost overruns lingers on

Prosafe, an operator of semi-sub accommodation rigs known as flotels, is still in dispute with Westcon over cost overruns related to Safe Scandinavia’s conversion from flotel to tender support vessel (TSV).

In its 2016 annual report on Thursday, Prosafe said that the litigation process relating to the final costs of the conversion of the Safe Scandinavia “remains ongoing” between Westcon Yards and Prosafe.

Westcon Yards and Prosafe Rigs entered into an EPC contract for the conversion of Safe Scandinavia into a tender support vessel on February 25, 2015.

The rig arrived at the yard in March 2015 and the plan was for the work to be completed in the first half of 2015. However, the project experienced delays thereby also delaying the contract start with the Norwegian oil company Statoil.

According to Prosafe, the conversion of the vessel has experienced a substantial cost overrun compared to the price estimate given by Westcon when the contract was entered into.

Following delays, the unit finally completed its acceptance testing and mobilized to the Oseberg Øst installation in the North Sea to start drilling support operations for Statoil in March 2016.

In mid-2016, Westcon made a claim through initiating litigation proceedings of NOK 306 million ($35.6M), plus interest. Prosafe Rigs disputed Westcon’s claim for additional compensation and presented a claim for repayment for NOK 270 million ($31.4M).

In case Prosafe does not get the claim, it will have to pay the NOK 306 million claim from Westcon and legal fees for both Westcon and Prosafe Rigs.

‘Potential court case’

The vessel’s owner further said on Thursday that a court mediation was held in mid-March 2017 without conclusive outcome. Mediation may continue between the parties, while a potential court case is scheduled for August and September 2017, Prosafe added.

As the final outcome cannot be reasonably measured, no asset or liability has been recognized relating to the settlement with the yard.

TSV contract 

Safe Scandinavia’s TSV contract with Statoil, which started in March 2016, has a firm period through to July 2018.

The Safe Scandinavia was built in 1984, upgraded in 2003, completed a life extension refurbishment in 2014, and finally converted in 2016.

Prosafe also said in its 2016 annual report that the market is at, or is near the bottom of the down cycle and that it is anticipated there will be a gradual recovery in demand and utilization from 2018.

Offshore Energy Today Staff