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Awilco contests Keppel’s decision to terminate $425m drilling rig construction contract

Photo: Lee Hong Liang Keppel stand.jpg
Oslo-listed Awilco Drilling is contesting Singapore-based Keppel FELS’ unilateral decision to terminate a contract for the construction of a semi-submersible drilling rig worth about $425m.

Singapore-listed Keppel Corp announced last Friday that its wholly-owned Keppel FELS has assessed that Awilco Drilling will “not be able to make payment of the second instalment under the Second Awilco Contract, which is due and payable in March 2021.”

Keppel FELS has issued a notice of termination of the contract to Awilco and also commenced arbitration.

“Keppel FELS reserved all its rights against Awilco, including the right to retain the amounts already paid by Awilco to date (approximately $43m) and seek reimbursement of Keppel FELS’ costs of the project up to the date of termination,” Keppel Corp stated.

The Second Awilco Contract was secured by Keppel FELS back in March 2019. It is the second contract following a first contract sealed in March 2018 for the construction of a similar semi-submersible drilling rig for harsh environment use.

Awilco Drilling said Keppel FELS’ legal action follows concerns raised by Awilco Drilling regarding the status of the project.

Awilco Drilling said it “vigorously denies the allegations by Keppel FELS in the Notice and considers the vessel construction contract to be intact.”

The rig in question, named Nordic Spring, is of Moss Maritime CS60 Eco MW design. Awilco Drilling has an option for one more rig at Keppel FELS of the same design.

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