SembMarine locks horns with Marco Polo over scrapped $306m rig contract

There were cracks on the rig, says Marco Polo.

A legal tussle has emerged between the two SGX-listed shipyards after Marco Polo Marine cancelled a $306m (US$214.3m) rig construction contract with Sembcorp Marine’s subsidiary PPL Shipyard.

Marco Polo's subsidary MP Drilling announced late Wednesday that it is terminating the contract after PPL’s failure to comply with certain “material contractual obligations”.

MP Drilling alleged that it has found cracks on all three legs of the new rig during two rounds of tests, despite repair works carried out by PPL after the first round of tests.

MP Drilling said that it will not be taking delivery of the new rig and that it will be seeking a refund from PPL of the initial amount of 10% of the contract price, or $30.48m (US$21.4m), with interest.

In response to Marco Polo’s statement, SembMarine said that PPL Shipyard has not received any notice of termination of the construction deal at the time of Marco Polo’s announcement.

PPL Shipyard also vehemently denied Marco Polo’s announcement and said that it is a “repudiatory breach” of the contract.

The contract was inked in February 2014 and involves the construction of a high-specification jack-up rig based on PPL’s proprietary Pacific Class 400 design.