Hyundai shipyard solves dispute with Norwegian company

By Park Sae-jin Posted : August 23, 2016, 09:17 Updated : August 23, 2016, 09:17

[Courtesy of Hyundai Heavy Industries]


Hyundai Heavy Industries, the world's largest shipbuilder, has agreed to acquire ownership of a semi-submersible drilling platform from a Norwegian offshore drilling rig company in return for repaying the first installment of 176 million US dollars.

The agreement ended an arbitration case between Hyundai Heavy and Fred. Olsen Energy over the delayed delivery of the platform called "Bollsta Dolphin" which has been built at a Hyundai shipyard under a $700 million contract signed in 2012.

In a joint statement, the two companies said: "We are very pleased that our differences have been resolved in an amicable way."

The rig was to be completed in March last year. In October last year, however, Hyundai Heavy asked for more time and money from Fred. Olsen Energy insisting a delay in delivery was caused a revised design requested by the Norwegian company.

In addition to claiming entitlement to the first instalment, the South Korean builder claimed an additional payment while Fred. Olsen Energy terminated the contract, citing a delay in delivery.

With its agreement with Fred. Olsen Energy, Hyundai Heavy solved one of  its several  disputes over delayed delivery or cancelled orders, but the South Korean shipyard faces a different problem because it will be hard to refund cash by selling the rig.

South Korean shipyards have been struggling with a protracted slump in the global shipbuilding industry. Demand has been weak due to low oil prices while competition with Chinese rivals has intensified. Oil companies have reduced spending while rig owners have canceled orders or asked for delayed ship delivery.

This year, Hyundai Heavy and two other leading local shipyards were put under creditor-led corporate restructuring to ride out a liquidity crisis through job cuts and the sale of non-core assets.

Aju News Lim Chang-won = cwlim34@ajunews.com
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