Statoil (NYSE: STO) will have to pay an undisclosed sum to China’s Oilfield Services Ltd. (COSL) for cancelling a contract for a COSL Innovator drilling rig after a fatal accident two years ago, a Norway court ruled on May 15.
One person died and several were injured when a big wave hit the rig on Dec. 30, 2015, when it had been drilling at the Statoil-operated Troll field offshore Norway.
The Oslo District Court ordered Statoil to pay COSL full operating rates for COSL Innovator from March 4, 2016 until June 4, 2016 and 70% of the rate until the contract’s expiry.
Each party must cover its own court expenses, it added.
“The court has given its verdict and none of the parties have won the case in its entirety,” Statoil spokesman Eskil Eriksen said, declining to say how much it would cost Statoil to fulfil the contract.
Norwegian business newspaper Dagens Naeringsliv said Statoil may have to pay COSL about 4 billion Norwegian crowns (US$493.26 million), citing its own calculations.
Statoil’s spokesman said it is considering whether to appeal.
Statoil had argued at the Oslo District Court that it had the right to cancel the contract because the accident was caused by the rig’s flawed design, and the rig couldn’t be repaired within a 30-days limit.
COSL said the accident was impossible to predict, a force majeure event, and therefore a 60-days limit should have applied.
The Chinese company also said its rig had been certified by international quality assurance company DNV GL and its use was approved by the Norwegian Petroleum Safety Authority.
A joint investigation group, which included representatives of COSL, Statoil and Aker Solutions, concluded the accident was “most probably caused by a rare combination of rig movement and a steep wave” hitting the deckbox.
Design rules for similar rig types were changed after the accident, and about 20 rigs in the world had to be rebuilt, according to the court documents.