Seatrium has had a newbuilding contract worth over SGD250m ($190m) for an offshore wind farm in the US cancelled by BP and Equinor.
The Singapore-listed yard group was awarded two contracts from Empire Offshore Wind, a joint venture between the two European oil majors, earlier this year worth a total of SGD500m.
“The group has been informed by Empire Offshore Wind that as a result of the significant macroeconomic conditions impacting the Empire Wind 2 project, it has decided to cancel the contract for the 1,260MW offshore substation [OSS] platform,” Seatrium said in a regulatory filing.
Construction work on the Empire Wind 2 OSS platform was expected to begin in June 2024, with minimal engineering said to have been performed to date.
Seatrium said that, as a result of the cancellation, it will avail construction capacity set aside for this project to others in the pipeline.
“The contract is structured on progressive payment milestones, and payment for the work performed to date has been received, resulting in neutral project cash flow,” Seatrium said.
Building of the 810MW Empire Wind 1 OSS platform began in the fourth quarter of 2023 and continues as planned, the yard added.
Seatrium said the cancellation is “not expected to have material financial impact” on the earnings per share and net tangible asset per share of the group for the current financial year.
The company said it remains “committed to supporting the global energy transition and is optimistic on the market opportunities in the long-term development of sustainable energy infrastructure”.
“Among renewable energy sources, offshore wind continues to play a significant role in meeting global climate goals. With its proven expertise in delivering a diverse suite of turnkey solutions for the offshore renewables sector, the group is well positioned to drive progress towards clean-energy solutions,” the yard added.
BP and Equinor said in a separate statement that the decision to cancel the Empire Wind 2 project reflected “changed economic circumstances” on an industrywide scale.
“The decision recognises commercial conditions driven by inflation, interest rates and supply chain disruptions that prevented Empire Wind 2’s existing Offshore Wind Renewable Energy Certificate agreement from being viable.”
Seatrium had earlier played down any potential negative impact on its business from the difficulties being experienced by the fledgling offshore wind industry in the US in a briefing with analysts in November 2023.
The company is also building a wind turbine installation vessel for Maersk Supply Service, which will be deployed on the Empire Wind development.
It is also working on a next-generation WTIV newbuilding for Maersk Supply, as well as the engineering, procurement and construction of another new WTIV for Dominion Energy.
