SINGAPORE (June 9): Keppel FELS has received a notice from Awilco Drilling’s wholly-owned subsidiary Awilco Rig, to terminate a contract to build a mid-water semisubmersible drilling rig for harsh environment use, on Monday.
The contract, which was secured by Keppel FELS from Awilco Drilling on Mar 11, 2018, was worth US$425 million.
See: Keppel to build mid-water harsh environment rig worth US$425 mil
Keppel FELS is a subsidiary of Keppel Offshore & Marine (Keppel O&M), a wholly-owned company of Keppel Corporation.
The notice of termination alleged certain breaches relating to the project management, schedule, resourcing and compliance on Keppel’s part, according to an SGX filing on Tuesday.
The notice came shortly before the next payment instalment of US$31.9 million (S$44.4 million) due from Awilco on Tuesday. The payment was previously deferred in March 2020 at Awilco’s request.
According to the terms of the contract, Awilco’s termination may entitle it to the return of payments already made with interest, or to pay for the work done by Keppel FELS and take over the rig. So far, Awilco has made payments of some US$54 million.
Keppel FELS denies the allegations by Awilco in the Notice and has rejected the purported termination of the contract.
Keppel Corp shares closed 7 cents lower, or 1.1% down, at $6.23 on Monday.