Seadrill's Russian Deal Postponed Again

drilling rig

Published Apr 17, 2015 6:06 PM by The Maritime Executive

North Atlantic Drilling, a subsidiary of offshore rig company Seadrill, has delayed closing a cooperation deal with Russia's Rosneft by two years and agreed to renegotiate the terms of the agreement, it said on Friday.

Western sanctions against Russia, and Rosneft in particular, have raised concerns about the proposed $4.1 billion deal and have already forced the Russian oil group to cancel several North Atlantic Drilling contracts.

"Today, all parties have mutually agreed to extend the termination date ... whereby any party can terminate the framework agreement and/or any offshore drilling contracts at any time prior to May 31, 2017, at no cost," North Atlantic Drilling said in a statement.

The companies also agreed to renegotiate the terms after rig rates collapsed with the 50 percent fall in crude oil prices and deep investment cuts by explorers.

Under the deal, which had already been delayed to May this year, North Atlantic Drilling would buy about 150 land rigs from Rosneft. The Russian oil giant, meanwhile, would take a stake of about 30 percent in North Atlantic Drilling.

Seadrill, which currently holds 71 percent of North Atlantic Drilling, would remain the majority shareholder.

An earlier deal included six offshore contracts, two of which were terminated by Rosneft last month.

North Atlantic Drilling said its rigs included in the agreement are free to sign binding contracts with other companies and it is also allowed to delay construction and delivery of any of the rigs.

Copyright Reuters 2015.