January 24, 2005

Farstad cancels PSV agreement

Norway's Farstad Shipping today announced that it has canceled its agreement with Aker Brattvag to build two platform supply vessels.

The decision follows last week's announcement that Norsk Hydro plans to retender a contract for supply vessel services that it had originally awarded Farstad. Hydro took the decision after an internal investigation showed that technical information relating to the tender was improperly handled. The Hydro investigtion was carried out following an anonymous email.

Announcing the decision to cancel the contract with Aker, Farstad said "the vessels were designed and ordered with a view to meet Norsk Hydro's specific and long-term requirements. We have concluded that it is wrong to build these vessels on speculation for an uncertain market for large PSV's. With the number of large PSV's which are now being built, the commercial risk will be too great. We have therefore chosen to cancel the building contracts and have today informed Aker Brattvag of our decision. Farstad Shipping must pay the Aker Brattvag a compensation for the cancelation. These are costs which Farstad Shipping will be compensated for by Norsk Hydro".
Farstad said the cancelation of the building contracts "must not be interpreted as having decided what we will do in the next round of invitations" to bid for the Hydro contract.

Aker Yards says it is "already pursuing alternatives for these production slots, which are considered to be attractive in today's market."



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