Halul cancels ship order with L&T Shipbuilding

Qatari fleet owner Halul Offshore Services Co. WLL has cancelled two of the 10 offshore oil exploration support vessels it ordered from L&T Shipbuilding Ltd in 2012 and 2013 as oil firms cut back production to deal with a steep fall in crude prices, reducing demand for vessels that supports oil rigs and platforms.

A spokesman for Halul Offshore confirmed the cancellation of two anchor handling, towing, supply and standby vessels (AHTSVs) with a bollard pull of 150 metric tonnes (mt), each costing $20 million. L&T has finished building the two ships, but is yet to inform the stock exchange about order cancellation. “L&T is looking for a new buyer for these two vessels,” a person familiar with the development said.

L&T Shipbuilding and its parent Larsen and Toubro Ltd Ltd could not be reached immediately for comment.

The two AHTSVs were part of the ship order placed by Halul Offshore at L&T Shipbuilding—two AHTSVs and two so-called platform supply vessels (PSVs) in 2012 and another two AHTSVs and four PSVs in 2013—for a total price of $260 million.

Out of the 10 ships, L&T has constructed and delivered two PSVs to Halul Offshore. The remaining eight are at various stages of construction.

Halul Offshore, owned by Milaha, previously known as Qatar Navigation QSC, is Qatar’s largest offshore support services firm.

The ships’ design uses modern tools including Computational Fluid Dynamics (CFD) and complies with the latest marine and crew accommodation regulations. The ships are equipped with Dynamic Positioning capability and will be suitable for fire-fighting, emergency response, rescue and standby, offshore supply, oil recovery and related duties. The anchor handlers are fitted with advanced diesel-hybrid propulsion.

Since entering the shipbuilding business in 2006, L&T Shipbuilding has built a few heavy-lift ships for European clients and offshore support vessels for Halul. With orders for new commercial vessels hard to come by, L&T Shipbuilding is focusing on building naval ships for the Indian Navy and the Coast Guard at its modern yard located at Kattupalli near Chennai.

L&T Shipbuilding is one of the three Indian private shipyards that are competing to win a Rs.25,000 crore order for constructing four so-called landing platform docks for the navy.

Larsen and Toubro Ltd has seen its shares fall 35% since 1 April and its faltering performance has forced analysts to cut earnings forecasts for 2015-16 and 2016-17 by as much as 21%, Mint reported on 3 February.