Singapore’s Keppel Fels, now a wholly owned subsidiary of Sembcorp Marine, has won its arbitration against Awilco Rig 1, itself a wholly owned subsidiary of Norwegian Awilco Drilling.

The arbitration came after Keppel Fels had terminated Awilco’s US$425 million contract for the newbuild mid-water semi-submersible rig Nordic Spring constructed at its Singapore yard after the client defaulted on a payment instalments.

The Nordic Spring was subsequently transferred to Asset Co as part of the process of Sembmarine acquiring Keppel Offshore & Marine. Both this drilling unit and sister rig Nordic Winter are now marketed by Dolphin Drilling.

Eric Jacobs-led Awilco Drilling said it was disappointed by the tribunal’s decision and that the company 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 said in a statement.

Keppel Fels and Awilco are embroiled in a second arbitration case relating to the Nordic Winter, which also had a US$425 million price tag. Awilco itself had cancelled this newbuilding contract back in June 2020, with the contractor’s termination notice alleging certain breaches related to “the project management, schedule, resourcing and compliance”.

The termination notice was served a day before Awilco was due to make its next instalment payment of nearly US$31.9 million on the rig, which Keppel at the time noted had already been deferred from March that year at the client’s request.

Keppel had reportedly been demanding US$693 million – the full purchase price of the Nordic Spring and US$268.9 million in respect of the Nordic Winter.

The arbitral ruling for the Nordic Winter is expected in the fourth quarter this year or the first quarter of 2024.

Extra funds needed

The now rig-less Awilco last month advised the tribunal had ordered additional hearing days in the second arbitration case.

“As a consequence of these additional hearing days, and the extensive increase in expert witness evidence and necessary further input from legal advisers, the company identifies that additional funding will be required,” the company said.

Awilco estimates that in addition to the US$2 million planned raised through the announced subsequent offering, a further estimated US$5 million will be required to enable it to pursue this arbitration case to a conclusion.

The Moss Maritime CS60 Eco MW design semisub drilling rig Nordic Winter was ordered Awilco in 2018 for delivery in March 2021. The identical Nordic Spring was ordered in 2019 and had originally been due for delivery in March 2022.

The rigs are capable of operating in water depths of up to 1500 metres and were built to operate in harsh environment areas including offshore Norway, particular in the Barents Sea.

Awilco also had options for two additional rigs of the same design at Keppel Fels before the contractual disputes arose.