Keppel Balks at Notice Alleging Contract Breaches, Cancellation
Keppel Corp. received a notice on June 8 from Awilco Rig 1 Pte. Ltd., a subsidiary of Awilco Drilling PLC, claiming to terminate a $425-million contract for the construction of a mid-water semisubmersible drilling rig for harsh environment use that was originally announced on March 11, 2018. The notice alleges breaches relating to project management, schedule, resourcing, and compliance.
According to Keppel, the notice came just before the next payment installment of $31.9 million was due from Awilco on June 9. This payment was previously deferred in March 2020 at Awilco’s request.
Keppel denies the allegations by Awilco in the notice and has rejected the contract termination. The company is considering its legal options and evaluating potential financial impact in consultation with its advisors. Keppel has further reserved all its rights under the contract, including retaining the installments already received and seeking compensation for the work done to date should Awilco default on the June 9 installment payment.
Under the contract terms, Awilco terminating the contract might entitle it to the return of payments already made (approximately $54 million) with interest, or to pay for the work done by Keppel FELS and take over the rig.
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