DSME suing Songa Offshore for $179m

Daewoo Shipbuilding and Marine Engineering (DSME) has filed a claim submission for $179m against Songa Offshore, regarding the construction contract for Songa Equinox, one of four Category-D drilling rigs being built at the Korean shipyard.

The claim includes a request for repayment of $22m in liquidated damages for the rig, which DSME says is due to errors and omissions in the design documents (the FEED package), which led to cost overruns and additional work being performed the rig.

Songa Equinox (pictured) was delivered to the client at the end of June. The rig was originally scheduled for delivery in mid-May, but was delayed by unexpected remedial work that needed to be done after its sea trial.

“Songa Offshore has performed an initial review of the claim and does not consider that there is any substance to the claims asserted by DSME. The company is confident of its position, since it is of the view that DSME is responsible for the delays and any attempt to recover cost overruns is of no merit due to the ‘turn-key’ nature of the construction contract,” Oslo-listed Songa said today in an exchange filing.

“Songa Offshore has obtained legal opinions from highly reputable law firms in the UK and Norway and from a Queen’s Counsel, all of which confirm the company’s position.”

DSME filed a notice of arbitration in July for the four Category-D rigs, which are being built for charter to Statoil but have faced delays and escalating costs.

Songa Equinox has started an eight-year drilling contract with Statoil, which will begin in the Troll oilfield on the Norwegian continental shelf. Drilling is scheduled to commence this quarter.

Holly Birkett

Holly is Splash's Online Editor and correspondent for the UK and Mediterranean. She has been a maritime journalist since 2010, and has written for and edited several trade publications. She is currently studying for membership of the Institute of Chartered Shipbrokers. In 2013, Holly won the Seahorse Club's Social Media Journalist of the Year award. She is currently based in London.
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