Singaporean offshore services company Mermaid Maritime has cancelled two construction projects with China Merchants Industry holdings in as many months.
The latest terminated contract relates to two tender assist drilling rigs that were ordered in January 2014 for a total price of US$298m.
Mermaid insisted that the contract was cancelled at the mutual agreement of both parties due to the challenging global oil and gas market that has led to low demand for drilling rigs, depressed asset values and charter rates.
Mermaid had made a pre-paid instalment of US$44m for the two drilling rigs, a sum it will now forfeit as a result of the cancellation. The sum has been recorded as an asset impairment in the company’s 2015 financial statement.
In December 2016, Singapore’s Mermaid Offshore, a subsidiary of Mermaid Maritime Public Company, cancelled an order for a subsea vessel ordered at Hong Kong-listed China Merchants Industry Holdings in 2014.
The DP1 dive support and construction vessel was originally ordered at CMIH’s yard on Mazhou Island, in January 2014 for a contract price of US$145.2m.
“In light of the challenging global oil and gas market situation and the cooperative relationship between the company and the builder (CMIH), the parties have mutually entered into a settlement agreement to terminate the construction contract for the vessel effective 6 December 2016,” Mermaid said.
The agreement provided for retention of US20.4m by CMIH. Mermaid was allocated US$1m for expenses incurred in relation to the construction contract and settlement.