DSME Seeks Arbitration From LMAA Against Songa Offshore

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Daewoo Shipbuilding and Marine Engineering (DSME) is building four semi-submersible rigs  for Cyprus-based Songa Offshore. The four semi-submersible rigs were ordered in September 2011 and February 2012.  DSME claims that the Front-End Engineering and Design (FEED) documents provided by Songa Offshore were flawed, hence causing cost overruns and delays in construction work.

In June 2015, after a month’s  delay, DSME delivered the first of four Cat D rigs named the Songa Equinox.  The unexpected delay occurred due to remedial re-work that was called for after sea trial.  This ship is a high specification, sixth generation, heavy-duty, all weather,  mid-water rig designed for perennial drilling.  All four rigs are to be  chartered by Statoil for the next 8 years. They propose to begin drilling operations by the last quarter of this year in the Troll Oil field, on the Norwegian continental shelf.

A spokesperson from DSME is reported to have told that this delay in construction of the four oil-drill rig ships, ordered by Songa has cost them nearly a trillion dollar loss.  They regret that Songa has neither acknowledged their mistake nor agreed to compensate.  Thus, they have approached the London Maritime Arbitrators Association (LMAA) for redressal of the issue.  He also added that DSME’s various efforts to resolve the disputes have been futile as Songa is unwilling to engage in a commercial negotiation to settle the issue.

Songa Offshore, in its defence, has said that any attempt to recover cost overruns is of no merit and that they will defend their position vigorously.

DSME is yet to complete and deliver the Songa Encourage, Songa Endurance and Songa Enabler, which are due for delivery between August 2015 – February 2016.  DSME is carrying out the contract as per schedule not letting this arbitration get in its way.

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