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KS Drilling extends delay in taking over Cosco-built rig

KS Drilling extends delay in taking over Cosco-built rig
Cosco (Nantong) Shipyard will extend the delay in the delivery of a completed rig to the buyer, KS Drilling, after a mutual agreement was reached.

The Chinese shipyard, owned by Cosco Shipyard, was originally scheduled to deliver the jack-up drilling rig to KS Drilling in the first quarter of 2014, but the delay has now been extended to 30 April 2016.

“The rig is ready to be delivered while the other rig under the shipbuilding contract had been delivered in 2014,” Cosco announced.

The original contract, entered into in May 2011, included the construction of two jack-up drilling rigs based on the LeTourneau workhorse class design.

“Further, Cosco Nantong and the shipowner have also agreed that either party shall be entitled to sell the rig to a third party if the offer could recover their respective costs, or the parties could negotiate in good faith for a compromised solution to sell the rig,” Cosco stated.

The Chinese firm added that if KS Drilling does not take delivery of the rig or if the rig is not sold by 30 April 2016, and if KS Drilling fails to place a new order for a similar unit, it will have to pay interest on any remaining interest on the rig.

The latest delay in rig delivery is a third for Cosco in recent weeks, with Logitel Offshore recently pushing back the delivery of one floating accommodation vessel and postponing work on a second unit, at the Nantong yard.

Last week, Axis Offshore also delayed the delivery of an accommodation rig at Cosco Qidong Offshore.

The weak and challenging operating conditions in the offshore market, due to soft crude oil prices, have led to lower utilisation and job cancellations of oil rigs.