A unit of Fred Olsen Energy has decided to cancel its contract with Hyundai Heavy Industries for a newbuild semi-submersible drilling rig amid a dispute over added costs and its delayed delivery.
The rig, the Bollsta Dolphin, is currently under construction at HHI’s Gunsan shipyard in South Korea.
Fred Olsen announced the contract termination on Monday, saying its wholly owned subsidiary Bollsta Dolphin ASA has decided to exercise its contractual termination right under a construction contract signed in 2012 for the rig. Fred Olsen said the termination is the result of a delay in delivery.
Last week, HHI sent a notice of arbitration claiming that Bollsta owed an additional payment of $167 million and that it was entitled to more time to complete the rig, claims that Fred Olsen said were “unfounded”.
In its announcement of termination on Tuesday, Fred Olsen said that the contract between HHI and Bollsta provides that Bollsta will now be owed a refund of the first installment paid to HHI of US $186,390,240, plus accrued interest.
The contract for the harsh environment, ultra deepwater drilling rig was ordered from HHI in May 2012 for a ‘first phase’ cost of $700 million, according to a 2012 statement from HHI.
On Fred Olsen Energy’s website, the Bollsta Dolphin was anticipated for delivery in March 2015.
In the same announcement on Tuesday, Fred Olsen also said that it has terminated the Bollsta Dolphin’s drilling contract with a unit of Chevron on mutually beneficial terms. The contract was originally signed in October 2012.