Songa Offshore launches counterclaim against DSME

Songa Endurance

Songa Offshore is considering a counterclaim against South Korea’s shipbuilder Daewoo Shipbuilding and Marine Engineering Co. Ltd. (DSME) due to DSME’s alleged failure to fulfill its obligations during the engineering and construction of Songa’s four Cat D rigs.

Songa says it is conducting a full legal review of the project and its position; finding evidence of default by DSME during the engineering and construction of each of the four Cat D units.

“Thus, the company is considering a counterclaim of significant magnitude against DSME due to DSME’s responsibility for default and will allocate sufficient resources to that effect,” Songa said in a stock exchange filing on Monday.

Songa’s counterclaim was prompted by claim submissions received on Friday, November 20, from DSME related to Songa Endurance, the second Cat D rig. DSME asserts a claim of $150 million, along with a request for repayment of liquidated damages in a total amount of $22 million. Songa took delivery of the Songa Endurance in August 2015 and the rig is expected to arrive to Norway in late November.

The claim is similar to the one submitted for Songa Equinox on November 16, 2015 and relates to alleged cost overruns and additional work in relation to Songa Endurance rig due to what DSME alleges were inherent errors and omissions in the design documents (as often referred to as the FEED package).

“Songa Offshore has performed an initial review of the claim and does not consider that there is any substance to the claims asserted by DSME,” the company reiterated.

The offshore driller claims that DSME is responsible for the delays and any attempt to recover cost overruns is of no merit due to the “turn-key” nature of the construction contract.

Offshore Energy Today Staff

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