SINGAPORE - Marco Polo Marine has unilaterally terminated a rig building order worth US$214.3 million (S$306.1 million) from a subsidiary of Sembcorp Marine.
In February last year, Marco Polo's unit MP Drilling inked a deal with PPL Shipyard to supply a turnkey jack-up rig.
The rig is scheduled for delivery in the fourth quarter of this year and able to operate in deeper waters of 400 ft and drilling high pressure and high temperature wells to depths of 30,000 ft.
In a statement on Nov 17, Marco Polo said it issued PPL on the same day a notice of termination following the "latter's failure to comply with certain of its material contractual obligations".
"In arriving at this decision to terminate the rig construction contract, MP Drilling has taken into account various factors including cracks found on all three legs of the new rig during two rounds of tests, notwithstanding repair works carried out by PPL after the first round of tests."
Under the circumstances, Marco Polo said MP Drilling will not be taking delivery of the rig and it will be seeking a refund from PPL of the initial amount of 10 per cent of the contract price - about US$21.4 million - paid earlier.
The termination could potentially set up a legal tussle with Sembmarine and comes amid a severe downturn in the offshore industry.