Fred Olsen Settles Rig Dispute with Hyundai Heavy Industries

Bollsta Dolphin. Photo: Fred.Olsen Energy
Bollsta Dolphin. Photo: Fred.Olsen Energy

Fred Olsen Energy says it has reached an agreement with South Korean shipbuilder Hyundai Heavy Industries to settle a dispute over the newbuilding contract for the semi-submersible drilling rig Bollsta Dolphin.

Under the agreement, Hyundai Heavy will retain ownership of the rig and pay $176.4 million to Bollsta Dolphin Pte, a subsidiary of Fred Olsen, to settle all claims in connection to the contract. The sum amounts to the first installment for paid to HHI by Bollsta.

In a joint statement issued Monday, the parties said: “We are very pleased that our differences have been resolved in an amicable way.”

Fred Olsen and Hyundai Heavy first agreed to the contract for harsh environment, ultra deepwater drilling rig back in May 2012, but the two began disputing last October after Hyundai Heavy demanded an additional payment payment of $167 million and more time to complete construction. Fred Olsen later terminated the contract altogether and demanded repayment of its first installment, claiming the delay was a breach of contract. At the same time, Fred Olsen said it had reached an agreement with Chevron to terminate the drilling contract for the rig on mutually beneficial terms. 

The harsh environment, ultra deepwater Bollsta Dolphin was ordered from HHI in May 2012 for a ‘first phase’ cost of $700 million, according to a 2012 statement from HHI. Delivery was originally anticipated for March 2015 from Hyundai’s Gunsan shipyard in South Korea.