South Korean shipbuilder Daewoo Shipbuilding and Marine Engineering (DSME) has cancelled a contract for construction of a drillship amid failure of a US owner to meet payment deadlines.
The order was placed by Vantage Drilling in July 2013 and the expected delivery was scheduled for August 18th, 2015.
The vessel, which was to be named Cobalt Explorer, was set to be built under the DSME Ultra Deepwater Drillship design, featuring 781’ x 137’ x 62′ in dimensions.
“The ship owners did not implement the interim payment to us, hence, on the basis of Article 11, the contract shall be terminated due to contract breach on the part of the owner,” DSME disclosed in a stock exchange filing.
The drillship is said to be worth around KRW 703 billion, almost USD 600 million (593.3 million).
The move comes following Vantage Drilling’s announcement dated on August 13, 2015, on the termination of the contract for the construction and sale of the Cobalt Explorer .
The company said it would seek to recover all funds paid to the shipyard totaling approximately USD 59.5 million plus contractual interest and any other amounts due under applicable law.
According to Vantage, the shipyard may seek to challenge the company’s ability to terminate the contract pursuant to arbitration provisions in the contract, which would result in a delay in recovery of any amounts that might be due to us under the contract.
” In addition, the shipyard itself may seek to terminate the contract for our failure to make the second milestone payment for the Cobalt Explorer under the contract. Such termination by the shipyard might entitle the shipyard to retain all supplies delivered to the shipyard and all milestone and other payments made by us to the shipyard to date, and to elect to sell the vessel and claim any deficiency in proceeds against us,” Vantage added.
“We may consider future alternatives with the shipyard for the delivery of the Cobalt Explorer. However, there can be no assurances that the terms and conditions of any such alternatives will be acceptable to us or the shipyard, ” the company concluded.
World Maritime News Staff