Dolphin Drilling’s rig detained after unilateral termination of contract

The Nigerian court has granted an interim injunction to keep offshore drilling contractor Dolphin Drilling’s semi-submersible rig Blackford Dolphin in Nigerian waters until the conclusion of an arbitration case with Nigerian oil and gas company General Hydrocarbons Limited (GHL), a Nigerian oil and gas company.

Previously, Dolphin Drilling announced at the end of April this year that it had terminated its lease agreement with GHL for the semi-submersible drilling rig Blackford Dolphin due to GHL’s failure to make overdue payments under the agreement. The two parties entered into a 12-month charter contract in October 2022, with operations commencing in March 2023 in Nigerian waters.

The contract was initially due to last until the end of March 2024, but late payment issues have led to an extension of the contract. According to the shipowner’s November 2023 disclosure, GHL’s net overdue amount has reached $17.3 million.

In March this year, an agreement was reached on the overdue payments and remaining work on the Blackford Dolphin, with the rig continuing to operate for GHL for an agreed period. Under the agreement, Dolphin Drilling supposed to receive the third installment by the end of April 2024, but GHL failed to make the payment on time. Subsequently, Dolphin Drilling issued a notice of termination of the contract and stated that it would recover GHL for the remaining amounts owed.

Following Dolphin Drilling’s announcement of the termination, GHL filed for arbitration in the Nigerian courts and has been attempting to force Dolphin Drilling to complete the remaining work under the terminated drilling contract.

Local Nigerian media even reported that GHL had obtained an interim injunction from the Federal High Court in Lagos, Nigeria. The interim injunction would allegedly prevent Dolphin Drilling from sailing, demobilizing or dismantling the rig from the field where it is operating until the hearing and determination is held to determine its good faith. This information has been refuted by Dolphin Drilling, with the exception of stating that GHL has indeed applied to the Nigerian court for an interim injunction requiring the rig not to leave Nigeria until the arbitration has been concluded.

On May 20, the Nigerian court ordered that the existing interim injunction, which maintains the status quo, will remain in effect until the final arbitration is concluded, and on May 21, Dolphin Drilling indicated that it would make submissions for the arbitrator’s consideration within the week to ask for the interim injunction to be lifted.

The semi-submersible rig “Blackford Dolphin” is known to have been built in 1974 in an enhanced Aker H-3 design and can accommodate 120 persons. The platform was scheduled to leave Nigerian waters for India to begin work for Oil India Limited. However, it now appears that the contract with Oil India Limited will be complicated.

Yangzijiang Shipbuilding

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