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Marco Polo Marine initates legal action against Sembmarine yard in rig dispute

Marco Polo Marine initates legal action against Sembmarine yard in rig dispute
Singapore’s Marco Polo Marine has initated a contractual dispute resolution process against Sembcorp Marine’s PPL Shipyard over the cancellation of a contract to build a jack-up oil rig.

Singapore-listed Marco Polo Marine announced on Tuesday that its subsidiary MP Drilling, which entered into the contract with PPL, is seeking a refund of approximately $21.4m of initial payment, and all other payments it had previously made to PPL, together with interest.

The amount of $21.4m is about 10% of the contract value of $214.3m to build the high-specification jack-up rig based on PPL’s proprietary Pacific Class 400 design.

“Following the notice of termination of the rig construction contract served on PPL on 17 November 2015, PPL, through its legal counsel, has not acceded to MP Drilling’s demand for, among others, the refund of the initial payment,” Marco Polo Marine stated.

Marco Polo Marine claimed that PPL has failed to comply with certain of its material contractual obligations, leading to the unilateral contract cancellation by Marco Polo Marine.

MP Drilling said it found cracks on all three legs of the new rig during two rounds of tests, notwithstanding repair works carried out by PPL after the first round of tests.

Marco Polo Marine affirmed that the consequence of the contract termination means MP Drilling is not obliged to make any further payment of the contract price to PPL.

Sembmarine, on the other hand, also issued a statement earlier saying that PPL disagrees with the allegations and it will also terminate the contract and regard the matter as a repudiatory breach of the contract by MP Drilling.

The contract was inked in February 2014. The new rig was scheduled to be delivered at the end of 2015, subject to satisfactory tests and certification by an agreed classification society.