UK firm emerges victorious in second rig arbitration case against Keppel

UK-based offshore drilling contractor Awilco Drilling has provided an update on an arbitration case related to a second semi-submersible rig termination deal, explaining that the arbitration tribunal ruled in its favor. This ruling is unlike the one in the first arbitration case, which Singapore’s Keppel FELS shipyard won.

The two players have been in dispute since 2020 over two rigs, Nordic Winter and Nordic Spring, after Awilco canceled both orders due to an alleged breach of contracts, which Keppel denied. Once Keppel FELS submitted claims concerning amounts recoverable due to termination provisions in the contracts for both rigs – ordered in 2018 and 2019, respectively – a statement of claims was received in the amount of $424.9 million for the first rig and $268.9 million for the second one.

However, these claims were vehemently denied by Awilco. The tribunal hearing for the Nordic Winter rig was scheduled to begin in October 2022 with an award expected in 1Q 2023 while the hearing for the Nordic Spring rig was likely to follow in May 2023. The arbitration tribunal ruling regarding the termination of a newbuilding contract between the firm’s Awilco Rig 1 Pte. Ltd. (AR1) and Keppel FELS for the construction of the first semi-submersible drilling rig, was awarded in favor of KFELS in April 2023.

As disclosed at the time, Awilco’s AR1 was “disappointed with the Tribunal’s decision” and was reviewing its options to establish whether there were grounds for appeal and the merits of such an appeal. A decision to forgo the appeal process for the ruling in the first arbitration case was made in May 2023.

In an update regarding the termination of the newbuilding contract between Awilco Rig 2 Pte. Ltd. (AR2) and Keppel FELS for the construction of the second semi-submersible drilling rig with hull number B382, the UK firm said that it had received the arbitration tribunal ruling. This one turned out to be in AR2’s favor, bringing an amount of $43 million plus interest and legal costs.

“The tribunal will issue a further award related to interest and costs. We will revert with further information including any notice of appeal received as appropriate,” outlined Awilco.

After completing the sale of the stacked WilHunter rig in June 2022, Awilco Drilling was left with no other rigs in its fleet, thus, its operations consist only of the arbitration proceedings against Keppel FELS.