Honghua seals rigbuilding deal at a low $25m to Kuwait Drilling Company

Honghua will deliver the new rig to its Middle Eastern client within this year, according to the Chinese firm’s announcement on its website.

The $25m price tag to the new rig raises questions of whether the rig had been a speculative construction by the yard or a cancelled order, all of which Honghua did not mention in its announcement.

A new rig would easily cost close to $200m if built at Chinese yards and more than $200m if constructed by Singapore rigbuilders such as Keppel Offshore & Marine and Sembcorp Marine.

Zhang Mi, chairman of Honghua, said the latest new order is a breakthrough for Chinese builders as Kuwait Drilling Company has always ordered their ultra deepwater drilling rigs from western firms.

“The sales agreement marks the first domestically built ultra deepwater drilling rig to enter the Kuwaiti market,” Zhang commented.

“We believe the agreement will further facilitate Honghua’s consolidation and expansion of its market share in Kuwait, and continue to help us penetrate the high-end drilling rig market in the Middle East,” he said.

Meanwhile, Hong Kong-listed Honghua announced earlier that its indirect wholly-owned subsidiary has secured a ten-year loan of RMB105m ($16.1m) from China Development Fund to support its key equipment and system development of its offshore engineering project.