Japanese shipbuilder Kawasaki Heavy Industries (KHI) has terminated a shipbuilding contract with Island Offshore for the construction of well intervention vessel Island Navigator.
Island Offshore ordered the vessel at KHI in November 2013. According to KHI, the shipyard had been facing difficulties in the engineering process as well as increases in material costs since the vessel was the first vessel of its type to be constructed at the shipyard.
Additionally, Island Offshore has been negotiating on a financial restructuring with its finance providers since November 2016. Since then, KHI has suspended construction of the vessel.
Considering the circumstances, KHI and Island Offshore reached a mutual agreement to terminate the contract.
KHI will suffer a loss of JPY13bn ($114.8m) from the termination, and said it will reallocate resources from the offshore sector to the merchant ship business and submarine business.