Troubled South Korean shipbuilder Daewoo Shipbuilding & Marine Engineering (DSME) is looking at a massive claim from Japanese energy major Inpex related to issues with the floating production storage and offloading unit currently deployed offshore Australia. The massive claim could not come at a worse time for DSME, one of the world’s largest shipbuilders, which is already mired in multiple crises.
DSME, which has been under state control since coming close to bankruptcy in the middle of the last decade, is facing a capital squeeze, admitting last month its debt ratio increased to 547% by the end of the first quarter because of a number of issues, including the cancellation of Russian ship orders, soaring raw material price increases and recent strikes by subcontractors. The news from Inpex yesterday is expected to ratchet up pressure at the yard.
DSME said in a regulatory filing that Inpex had brought the case to the International Chamber of Commerce (ICC) asking for around $975m in damages for delays and defects in commissioning the FPSO unit.
The claim, which amounts to more than half of DSME’s equity capital ($1.7bn) involves the 2017-built Ichthys Venturer built at Okpo Shipyard and commissioned in 2019.
built at Okpo Shipyard and commissioned in 2019.DSME added that Inpex had previously agreed to additional costs related to changes in contract details signed in March 2012 and that the “amount of compensation and the grounds claimed is unreasonable”.
“We are currently preparing a response to Inpex’s claim and arbitration request, and we plan to respond according to the arbitration process in the future,” DSME noted.
The lawsuit adds to the already complicated situation at DSME, which has been working to normalise its operations since the subcontract workers ended their strike last month, causing the company to lose more than $600m.
