Kosmos Wins Drillrig Case Against Tullow

US independent Kosmos Energy has won an arbitration ruling against its partner offshore Ghana, Tullow Oil, over responsibility for costs arising from the 2016 termination of the West Leo drillrig contract.

Kosmos and Tullow both confirmed July 18 the verdict was delivered the previous day by the International Chamber of Commerce. It means Kosmos is not required to fund its $50.8mn equity portion of Tullow’s liabilities to Seadrill. Kosmos will also be reimbursed by Tullow for some $14mn plus interest of arbitration costs, and amounts previously paid under protest – including rig demobilisation costs.

Bermuda-registered Seadrill said July 3 that its 46.6%-owned Seadrill Partners master limited had been awarded a $273mn settlement by the English High Court against Tullow over the early termination of the West Leo drillship – after Tullow lost the argument that it was right to terminate the contract under force majeure.

UK-listed Tullow explained then that Kosmos’s arbitration case against it focused on a roughly 20% share of the liability of any costs related to the use of West Leo beyond 1 October 2016.

Tullow had made a case for force majeure, because Ghana suspended exploration drilling by Tullow in the western part of its TEN licence in 2H 2016, after its neighbour Cote d’Ivoire took a territorial dispute to international arbitration. That case was won by Ghana in September 2017 and Tullow subsequently resumed exploration of the area.

Update July 18 8pm GMT: Seadrill Partners has said that Tullow will not be appealing the English High Court ruling in favor of Seadrill Ghana Operations Ltd, relating to the early termination of the West Leo contract and that Seadrill Ghana has received approximately $248 million, inclusive of interest, but net of withholding tax, VAT and legal expenses.

West Leo drillship (Photo credit: Seadrill)