Octobuoy construction cancellation costs Cosco S$90m

Singapore: Cosco (Nantong) Shipyard has opted to cancel construction of the hull and the topside module it is building for an Octabuoy semi-submersible production platform, after failing to find a willing buyer.

The decision will hit the yard’s parent company, Singapore-listed Cosco Corp (Singapore), with a one-off charge of around S$90m  for the financial year 2014.

“The steep fall in crude oil prices over recent months has had an adverse impact on the global offshore marine industry. This has made it even more difficult to secure a buyer for the Octabuoy as industry players have cut back even further on new orders,” Cosco Corp (Singapore) said in an exchange filing today.

“This difficulty is compounded by the specialised design of the Octabuoy and the substantive investment in the customised equipment that is required to continue the project.”

Several potential buyers previously expressed interest, but no agreements were signed.

Cosco (Nantong) originally won the construction contract in April 2008 from ATP Oil & Gas (UK), which has since become insolvent.

ATP UK has been in company voluntary arrangement (CVA) under UK law since July 2014, and will pay its creditors over a fixed period.

Cosco Nantong received an initial part payment of approximately $5m on December 11, 2014.

The company has not confirmed what its total debt claim against ATP UK is. [09/01/15]

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