Songa Hits Back At DSME With $65.8m Demand

Published at 10:05AM - 21/03/16

Songa hits back at DSME with a US$65.8 million demand, as the row over the build of two offshore drilling rigs continues to escalate.

The latest move in the ongoing dispute stems from, a disagreement be between Songa Offshore and Daewoo Shipbuilding and Marine Engineering (DSME) over, the spiralling costs involved with the build of the Songa Equinox and Songa Endurance drilling rigs.

Both rigs have now been delivered and are both currently on long-term contracts, for Norwegian oil major Statoil, for work in the North Sea.

Songa DSME Rig Row

Initially DSME had made a US$150 million demand to Songa, alleging that their shipyard had incurred the additional costs to the same value during the build of the Songa Endurance.

The costs according to DSME were due to Songa Offshore, stemming from errors in their design documents for the drilling rig.

DSME then made a further US$22 million claim to Songa for the ‘repayment of liquidated damages’.

Songa Hits Back At DSME With $65.8m Demand

Songa Offshore released a statement at the time, refuting all of DSME’s claims, and insisted that the company would not only fight DSME on the claim, but put in a counter claim for losses on their part.

Monday (21st March) brought conformation of Songa’s action, with a statement released by the offshore drilling company laying out their version of events and a demand for US$65.8 million from the Korean Ship yard.

The statement read:

‘DSME’s claim relates to alleged cost overruns and additional work in relation to the Rigs due to what DSME alleges were inherent errors and omissions in the design documents (as often referred to as the FEED package).’

‘Along with its defence, on the same date Songa Offshore submitted counterclaims in respect of the Rigs for the aggregate amount of USD 65.8 million, by means of which Songa Offshore intends to recover damages caused by the default of DSME.’

‘Songa Offshore will vigorously defend the claims asserted by DSME.’

‘Songa Offshore considers that DSME is solely responsible for the delays to the Rigs and any attempt by DSME to recover cost overruns has no merit due to the “turn-key” nature of the construction contracts.’