Panama-domiciled, Texas-headquartered engineering contractor McDermott and French oil supermajor Total held a little ceremony in October of 2018 to mark that the former's Indonesian unit had begun to produce the steel construction of the new Tyra field facility.
The occasion, which entailed the symbolic cutting of a red ribbon, can be viewed in this Youtube video.
Today, just over one year later, McDermott probably isn't celebrating anything. Rather, the company has now filed for Chapter 11 insolvency protection.
However, McDermott has the support of two thirds of its creditors, which want the company to go through a restructuring to reduce its debt to USD 4.6 billion.
McDermott equity depreciated by almost 15 percent in premarket trading after the announcement was made.
Although the firm informs in a corporate announcement that its projects are continuing as planned, adding that all suppliers under McDermott will be paid in full for their receivables.
With a project as large as the reestablishment of Tyra, challenges should be expected
McDermott is supposed to deliver a total of 36 tons of steel for the new Tyra field, which is one of the largest projects the company has worked on in the North Sea.
Initially, McDermott was responsible for, among other things, engineering work, procurement and production of a range of elements for the new facility.
Most of the engineering work is complete, while construction of the rig has been underway since the autumn of 2018.
The establishment of Tyra is the largest investment to date in the North Sea. It will total to approximately 21 billion.
The field's former owner, Maersk Oil, nominated McDermott for the job back in 2017. Total has since taken over the reestablishment work following its purchase of Maersk's energy assets.
Total: We'll contain the consequences
For some time now, Total has been aware that Mcdermott would need to restructure its business, and the French field operator thereby doesn't think the contractor's present liquidity problems will end up impacting project plans, says Total Managing Director of E&P Denmark Patrick Gilly.
"Up to McDermott's announcement on the restructuring, we have worked to find solutions to help limit the consequences for the Tyra project," Gilly writes in a reply to EnergyWatch.
Total, for instance, expanded its project team in Indonesia in its efforts to improve oversight and support work at the yard.
Furthermore, McDermott licensed the some of its components to subsupplier Sembcorp Marine Offshore after holding talks with Total in December.
Altogether, Total is confident that the deal with McDermott will be upheld.
"With a project as large as the reestablishment of Tyra, challenges should be expected. It's unusual that a main supplier petitions to restructure the business, but we're well prepared and continue in constructive dialog with McDermott, and we're optimistic about the agreed-upon deliveries," Gilly says.
During the year, old installations at the Tyra field will need to be dismantled. Beyond Indonesia, the rig is being built in Singapore, Spain and Italy.
Total still expects the field to be operational in July 2022 – on time and without budget overruns.
English Edit: Daniel Frank Christensen