Drilling Rig Dispute Resolved for Fred. Olsen, HHI

Published at 09:06AM - 22/08/16

Drilling contractor Fred. Olsen Energy and shipbuilder Hyundai Heavy Industries (HHI) have finally reached an agreement over the Bollsta Dolphin semi-submersible drilling rig dispute.

According to a statement issued by Fred. Olsen Energy, HHI will retain ownership of the rig and all the arbitration proceedings related to the dispute have been terminated by mutual consent.

“HHI will pay back a first instalment of US$176.4 million (£135.17 million),” Fred. Olsen Energy informed.

Drilling Rig Dispute Resolved for Fred. Olsen, HHI

 “We are very pleased that our differences have been resolved in an amicable way,” the companies said in the statement.

The unit involved in the drilling rig dispute is a Moss Maritime CS 60 E design able to drill at water depths of up to 10,000 feet.

The dispute between Fred. Olsen Energy and HHI goes back to 2015.

The harsh environment, ultra-deep water rig had been ordered back in 2012, but Fred. Olsen decided to cancel the contract amid added costs and a delayed delivery.

Bollsta Dolphin was anticipated for delivery in March 2015, according to information on Fred. Olsen Energy’s website.

Hyunday Heavy Workers Start Strike

However, the result of the drilling rig dispute over the controversial construction of the semi-submersible unit comes as a hard hit for HHI, as the shipbuilder now has to pay a hefty set of instalments for a platform that should be very difficult to sell in the current market.

Meanwhile, workers at HHI are about to start an indefinite strike on August 31 to protest against the shipbuilder’s restructuring plans.

Workers at three of the company’s shipyards in South Korea – Ulsan, Hyundai Mipo and Hyundai Samho, will down tools demanding management to relook at its strategy to lay off thousands of workers.

The workers are demanding an end to the layoffs and pay cuts, following HHI’s need to enter restructuring on the back of the shipbuilding downturn and the weak offshore market.