Awilco Drilling triumphs in second rig dispute with Keppel FELS

Norwegian shipowner Awilco Drilling has been successful in the second of two arbitration cases against Singapore’s Keppel FELS over cancelled drilling rigs.

The legal dispute arose from the termination of fabrication contracts for the Nordic Winter and Nordic Spring semisubs due to alleged breaches of contract. In April this year, Awilco Drilling lost an arbitration case related to the Nordic Spring, but the award for the Nordic Winter was more favorable to it. The court ruled that Keppel should compensate the shipowner for the Nordic Winter in the amount of US$43 million plus interest and legal costs.

It is understood that Awilco Drilling ordered the two rigs in 2018 and 2019 for $425 million each, respectively. In June 2020, Awilco Drilling announced the termination of the contract for the construction of the Nordic Winter rig, citing the shipyard’s breach of contract and claiming that its subsidiary, AR1, was entitled to a refund of the US$54.72 million in installments paid to the shipyard, plus accrued interest. In a statement in response, Keppel FELS denied the owner’s allegations and rejected the so-called “termination of contract”.

In early December 2020, Keppel FELS decided to terminate the contract for the construction of the Nordic Spring on the grounds that Awilco Drilling would not be able to make the second installment of the payment originally scheduled for March 2021 and would commence arbitration and exercise the shipyard’s rights. Later in the same month, Awilco announced that it was exercising its right to terminate the contract for the construction of the Nordic Spring, also on the grounds that the shipyard had breached the shipbuilding contract, and that it had the right to claim from the shipyard for the $43 million in installments it had already paid, together with related interest.

No longer operating a fleet of drilling rigs, Awilco Drilling has focused primarily on the recovery of a $97.7 million deposit payment to Keppel and other variable payments. Both rigs have been added to Dolphin Drilling’s fleet.

Yangzijiang Shipbuilding

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