COSCO Abandons Octabuoy Semi-Sub Project

COSCO Corporation (Singapore) has abandoned the construction of the Octabuoy semi-sub production platform underway at its Nantong Shipyard in China. The octagonal platform was being built for ATP Oil & Gas (UK) which has now filed for bankruptcy.

The construction deal was struck in 2008, and the offshore platform’s hull has been largely completed with work underway on the topside. To-date, ATP UK has made partial payment to COSCO Nantong under the vessel building contract and part of the variation order remains unpaid. 

COSCO Nantong received a notice from the CVA managers of ATP UK on December 9 acknowledging COSCO Nantong’s total debt claim, and on 11 December 2014, COSCO Nantong received an initial part payment of approximately $5 million.

“While COSCO Nantong has been making efforts to find a buyer for the Octabuoy and several potential buyers had previously expressed interest, COSCO Nantong has so far not entered into any agreement for the sale,” said Wu Zi Heng, COSCO Vice Chairman and President of COSCO Corporation (Singapore). 

“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. This difficulty is compounded by the specialized design of the Octabuoy and the substantive investment in the customized equipment that is required to continue the project,” he said.

The company’s decision to discontinue the project is expected to result in a one-off charge of approximately S$90 million for the company for the financial year ended 31 December
2014.

COSCO Corporation (Singapore) is a subsidary of COSCO Group, currently one of the largest offshore engineering groups in China. Projects on the COSCO Group’s order book include FPSOs, semi-submersible accommodation rigs, drilling rigs and platform supply vessels.