Swire Pacific Offshore cancels four Brazil newbuilds

APRIL 9, 2015 — Today, Singapore-headquartered shipowner and operator, Swire Pacific Offshore Operations (Pte) Ltd (SPO) has reaffirmed the cancellation of shipbuilding contracts for four vessels with Brazilian shipyard Estaleiro Ilha S.A (EISA).

This update follows a period of negotiations requested by EISA following a Notice of Cancellation delivered by SPO in August 2014.

"Regrettably, on SPO's specific project," said a statement from the company, "EISA was unable to meet the minimum and critical conditions to continue with the construction of the vessels despite SPO's repeated and good faith efforts to find a satisfactory way forward. SPO's Board has concluded that they can no longer have confidence in the delivery of these vessels on a reasonable timescale and to SPO's satisfaction, and therefore must reaffirm the cancelation of these shipbuilding contracts."

Managing Director of Swire Pacific Offshore, Neil Glenn said, "SPO commissioned EISA to build four Brazilian-flagged vessels in May 2011 as part of our plans to develop our business in Brazil. The first vessel was due for delivery in January 2014 with the remaining vessels at approximately three month intervals thereafter. The vessels were not built against specific client tenders or contracts but rather to service the general requirements of the offshore industry in Brazil.  As of today, we have not taken delivery of any vessels, and have no reason for confidence that they will be delivered to our satisfaction and on a reasonable timeframe. SPO's Board has therefore resolved to reaffirm cancellation of the orders. This is the first time that SPO has canceled a vessel order and I hope it is very clear that the decision was not taken lightly. We remain committed to the Brazilian market as it is still an important part of our long term plans."

SPO's vessel building contracts in other countries are proceeding as planned. The company recently took delivery of the anchor handling tug supply vessel (AHTS), Pacific Centurion and platform supply vessel (PSV), Pacific Goldfinch. SPO will take delivery of five more PSVs in 2015 and four more PSVs across 2016 and 2017.

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