Refund without order cancellation! Qidong COSCO Shipbuilding brings 'hope'

2017-07-07 09:00

Proactively returning a $25.3 million advance payment and further delaying delivery by 3 years, COSCO Heavy Industry seems unable to tolerate the shipowner's indefinite delays, deciding to take the initiative and restore the 'Hope No. 4', valued at $526 million, to its 'freedom'.

Norwegian drilling contractor Sevan Drilling recently announced that it will Qidong COSCO Shipyard built cylindrical semi-submersible drilling platform The delivery of the "Sevan Developer" ("Hope No. 4") has been further delayed to June 30, 2020. This delay is an additional 3 years compared to the previous delay, and a total of 6 years compared to the original delivery date of April 2014.

Meanwhile, after the agreement expired, on July 5, Sevan Drilling stated that the newly revised delayed delivery agreement will come into effect after receiving a refund of $25.3 million plus interest from Qidong COSCO Shipyard (equivalent to 5% of the contract price), no later than July 31, 2017.

During the period of delayed delivery, Sevan Drilling can continue to seek acceptable charter contracts for this drilling platform to obtain the funds needed for delivery.

In addition, Qidong COSCO Shipyard may choose to terminate this delayed delivery agreement on July 1, 2018, or July 1, 2019, but must return the remaining $1 million investment difference to Sevan Drilling.

Industry insiders analyzed that this agreement is the best option for both parties under the current market conditions, meaning that both the shipyard and the shipowner have the right to handle this drilling platform. Once the shipowner finds a suitable charter, as long as the full payment is made, the shipyard can deliver the ship; at the same time, if the shipyard has a better way to handle it, the shipyard can decide how to dispose of it by paying the remaining $1 million. This person said that previously, CIMC Raffles The successful solution in handling "Blue Whale No. 1" may be a feasible reference for COSCO Heavy Industry. However, this person also stated that the "Hope No. 4" cylindrical semi-submersible drilling platform has special characteristics, and it was originally designed for the UK North Sea area, and it may be difficult to find a suitable area domestically.

However, according to upstream news, China National Offshore Oil Corporation has already conducted conceptual research on cylindrical semi-submersible drilling platforms (FDPSO), preparing to use them to develop the Lufeng 15-1 oilfield in the Pearl River Mouth Basin in the South China Sea. This is undoubtedly good news for COSCO Heavy Industry.

It is understood that Sevan Drilling ordered the "Sevan Developer" from COSCO Shipbuilding in 2011, valued at $526 million, and built by Qidong COSCO Shipyard, with an original delivery date of April 2014. However, due to suppliers delaying the delivery of some key equipment, the construction progress was seriously delayed, and the completion time was eventually postponed to October 2015. Subsequently, because Sevan Drilling could not find a charter contract, the "Sevan Developer" has been idle since its completion, and the delivery date has been postponed several times.

In October 2014, both parties agreed to postpone the delivery of the "Sevan Developer" by 12 months. The delayed delivery agreement also included alternative delayed delivery times, starting from October 15, 2014, at intervals of 6 months, with a maximum delay of 36 months. At the end of May this year, in order to complete the negotiation, the delayed delivery agreement for the "Sevan Developer" was further postponed to June 30. However, according to the previously reached agreement, if the "Sevan Developer" fails to find a charter contract, Sevan Drilling can choose to cancel the order in October.

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