Sapura Energy has received a request for arbitration over a contract for the transportation and installation of offshore wind turbines in Taiwan.
Sapura agreed to carry out the work in mid-2019. At that point, it said it expected to complete the work by the third quarter of the 2021 financial year.
In February 2022, it said it was terminating the contract. Sapura complained that it had been misled about the state of the soil at the Yunlin offshore wind farm site.
Yunneng Wind Power now wants recompense for the cancellation. It has issued a provisional claim of 50 million euros ($54mn).
Sapura’s share price fell around 10% following the announcement.
Yunneng has issued requests for arbitration to Sapura subsidiaries SEB and SOSB on January 22. The company said it had discovered the request at the end of January 26.
German law governs the contract and the German Arbitration Institute will hear the claim.
The claimant has complained the SOSB did not follow the schedule. It has made a number of allegations, including alleged wilful failure, as well as seeking the costs of arbitration.
The statute of limitations specifies that Yunneng would need to file its claim by December 31, 2023. The company is also seeking to suspend this.
SOSB and SEB must nominate an arbitrator by February 12 and file an answer to the request by March 7. The two subsidiaries are seeking legal advice on the claims.
In 2022, Sapura said Yunneng had breached the contractual agreement between the two companies. Yunneng, Sapura alleged, provided “inaccurate and misleading soil data which is a serious breach of its obligations”. SOSB was relying on accurate information, it said. Misleading data “critically affected” the execution of the work and increased costs, which Yunneng failed to cover.
SOSB claimed it could not continue working on the project without amendments to the deal. At the time, Sapura said the cancellation would have no impact on its reporting for 2022.
Slippage
Despite Sapura’s cancellation of the contract, Yunneng went ahead with work on the Taiwan wind farm. In November 2023, it reported the installation of 45 monopile foundations, 26 inner array grids and 12 export cables, in addition to 34 wind turbines.
It aims to complete the installation of all 80 wind turbines, generating 640 MW, this year.
The company has noted “unique challenges” of building the project in the Taiwan Strait, particularly around seabed conditions. It has also reported a number of monopile slippages during construction.
Abu Dhabi’s National Petroleum Construction Co. (NPCC) came in to replace Sapura in 2022. It launched work on the project using its DLS 4200, which is currently on its way back to Taiwan from the Middle East, according to Marine Traffic.
Global Infrastructure Partners (GIP), TotalEnergies, Thailand’s EGCO Group and Sojitz Corp. are backers of Yunneng. The group refinanced the project earlier this month.
The arbitration request comes as Sapura continues to restructure its finances. In December, the company said it had been given more time, until May 31, to submit its Practice Note 17 (PN17) regularisation plan. This will cover a restructuring of debts,
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