Keppel FELS Wins Arbitration Case Against Awilco Drilling Over Offshore Rig Construction Termination

Image Credit: Awilco Drilling (file image)
Image Credit: Awilco Drilling (file image)

An arbitration tribunal this week ruled in favor of Keppel FELS in the case vs. Awilco Drilling over a June 2020 offshore drilling rig construction termination.

Awilco Drilling in 2018 ordered the harsh environment semi-submersible drilling rig from Keppel. This was followed by another newbuild order of the same type and with Keppel in 2019. These were first such orders after the previous oil price collapse.

The first rig - the Nordic Winter - was expected to be delivered in April 2021, with the second one - the Nordic Spring - scheduled delivery in March 2022.  

Awilco Drilling's subsidiary Awilco Rig 1 in June 2020 notified Singapore-based Keppel FELS that it had exercised its contractual termination right under a newbuilding contract between KFELS and AR1 for the construction of a semi-submersible drilling rig, Nordic Winter, "as a result of breaches under the Vessel Construction Contract." Awilco then also said it was entitled to a refund of the installments paid to KFELS of $54,720,985 plus accrued interest.

Keppel denied the allegations by Awilco and rejected the termination of the contract. Keppel then said Awilco had defaulted on payment of an installment for the rig construction, and the rig builder itself then issued a notice of termination of the contract to Awilco has started arbitration to enforce its rights against Awilco.

In a statement this week, Awilco said that the arbitration tribunal had ruled in favor of Keppel FELS, a company that recently became a part of Sembcorp Marine.

"AR1 is disappointed with the Tribunal's decision and is currently reviewing the award to establish if grounds exist for appeal and, if so the merits of such an appeal. We will revert with further information as soon as the detailed review of the arbitration award has been completed," Awilco Drilling said.

Worth noting, Awilco in December 2020 cancelled the order for the Nordic Spring rig, too.  Keppel and Awilco are currently involved in arbitration case over this cancellation, too.

According to info from public statements in 2020, Keppel FELS was seeking to redeem from Awilco's subsidiaries $424.9 million for the first rig, and $268.9 million for the second, the claims that Awilco denied.

Awilco Drilling was seeking from Keppel a total amount of $97.7 million.

Worth noting, Awilco had for years operated two 1980s-built semi-submersible drilling rigs, the WilHunter and the WilPhoenix, in the UK North Sea.

The company last year sold the WilPhoenix to Well-Safe Solutions, for conversion into a P&A unit, and the WilHunter for recycling.

 Following the agreements to sell both of its rigs, Awilco said its principal activity was to continue the arbitration processes with Keppel FELS shipyard.

 

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