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Cosco Shipyard urges cooperation with rig owners to tackle market downturn

Cosco Shipyard urges cooperation with rig owners to tackle market downturn
Amid the downturn in the drilling rig market due to the fall in crude oil prices, China’s Cosco Shipyard has urged for a greater cooperation between rigbuilders and owners in order to tide through the recession.

Liang Yan Feng, general manager of Cosco Shipyard, has pointed out that the yard is prepared to work with rig owners to amicably resolve any requests for delays in deliveries.

Liang noted that the drilling rig market is now going through a difficult period where owners were heard to delay taking over the new rigs or even cancel the contract as the rig market suffers from reduced charter rates and lower utilisation.

He further observed that since the second half of 2014, orders for new rigs have dropped. So far, none of the options for new rigs at Chinese shipyards have been exercised, although there are owners contemplating the purchase of new rigs during the current low price environment and looking to the market rebound in future, Liang said.

Cosco Shipyard focuses on the construction of cylindrical-shaped semi-submersible drilling platforms, and has delivered three of such units to Norway’s Sevan Drilling.

Since October last year, Sevan Drilling and Cosco Shipyard have agreed to delay the delivery of a fourth unit by 12 months, extendable by up to a maximum of 36 months.

At present, the biggest headache for Chinese yards is such a request by owners to delay deliveries, but a mutually agreed solution is preferred rather than contract cancellation, Liang said.

Cosco Shipyard also builds OSVs, FPSO and semi-submersible drilling rigs. Last year, the yard racked in a revenue of around $2.5bn.