Saipem and Harland & Wolff Terminate Offshore Wind Contract

UK ship repair, shipbuilding, and offshore construction company, Harland & Wolff, has terminated a contract with Saipem for the manufacture and delivery of jacket foundations for the 450 MW Neart na Gaoithe wind farm offshore Scotland.

As previously reported, Saipem contracted Harland & Wolff to manufacture and deliver eight wind turbine jacket foundations for the project.

Harland & Wolff intended to use its previously acquired Methil facilities in Fife for the fabrication work, and the project was expected to create around 290 direct and indirect jobs.

The scope of the contract had since been reduced from eight jacket foundations to four.

“The Saipem project was the first project to arrive in Methil after our acquisition of the facility. With the previously announced delays and the changed economic position of this project, it was in the Company’s best interests to draw the project to a mutually acceptable close. The project has been a helpful learning curve for the business in this environment and we will take the lessons learnt forward into our next major project,” John Wood , Group Chief Executive Officer of Harland & Wolff, said.

Following the negotiations about the termination of the contract between the two parties, the contract value has been finalised at GBP 16 million, representing approximately 70 per cent of the contract value as per the deed of variation signed in September 2022 as part of descoping from eight jackets to four. The entire amount has now been paid in full and final settlement of the contract, Harland & Wolff said.

Having completed the contract settlement with Saipem in its entirety, Harland & Wolff said it would undertake a process of rationalising the Methil facility’s workforce to approximately 115 core personnel in order to align the company’s resources and cost base with the level of work being undertaken at the site whilst protecting its margins.

The company also said that looking to 2024 and beyond, it expects the renewables market to demand more local fabrication capacity in the UK than is currently available. Harland & Wolff considers that the lead time to secure contracts in the renewables space takes approximately 12 – 36 months and a number of such tenders have already been submitted for additional work at Methil over the mid-to longer term. Meanwhile, the company said it was also advancing on a pipeline of nearer term smaller projects which it expects to undertake over the coming months.

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