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Petrobras cancels drillship contract with Vantage Drilling, arbitration will follow

Petrobras has terminated its drillship contract with Vantage Drilling, alleging that the NYSE-listed contractor has “breached its obligations” under the contract.

Vantage says it has filed for arbitration, stating the termination is a “wrongful attempt” to cancel the contract.

Vantage Deepwater Drilling Company (a Vantage subsidiary) had agreed to supply the services of its ultra-deepwater drillship Titanium Explorer to Petrobras Venezuela Investments & Services (PVIS) in a contract signed February 4, 2009 that was novated to Petrobras America (PA).

The notice of termination was received by Vantage Drilling from PA and PVIS on August 31.

“The notice does not provide any explanation as to the facts and conduct that constitute a breach by Vantage of its obligations under the drilling contract,” the contractor said in a statement.

“Vantage strongly disagrees with the allegations of contractual breaches made by PAI and PVIS in the notice. Vantage has filed for arbitration to challenge the assertions made in the notice and to assert that the notice is a wrongful attempt to terminate the drilling contract.”

Titanium Explorer is one of three ultra-deepwater drillships owned by NYSE-listed Vantage, the others being Platinum Explorer and Tungsten Explorer. The company also owns four Baker Marine Pacific Class 375 ultra-premium jack-up drilling rigs.

In mid-August, Vantage Drilling cancelled its order with Daewoo Shipbuilding Marine Engineering (DSME) for the Cobalt Explorer, the ultra-deepwater drillship it ordered from the South Korean yard in July 2013.

DSME said the KRW 703bn ($593m) order was deleted after Vantage failed to make its second payment installment, which DSME said is a breach of contract. An arbitration between the two parties looks likely, in order to recover losses.

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