Harland & Wolff and Sapiem reduce NNG contract scope

Harland & Wolff Group (H&W) revealed that the Neart na Gaoithe (NnG) offshore wind farm foundation contract in secured with Saipem in 2021 has been de-scoped. It was attributed to a number of client materials arriving late and being defective in nature rendering them incapable of being used.

The original contract covered a twelve-month completion period and concerned eight wind turbine generator jackets for the NNG project. Both parties (H&W and Saipem) have recognised the difficulties in meeting the project schedules due to these problems Therefore, a new agreement has been reached which will involve de-scoping the contract from eight jackets to four jackets.

In recognition of the investments and fixed costs incurred by the Company for fabrication, a revised contract has been agreed for four jackets with a value of £23 million, in place of the original contract value of £26.50 million for eight jackets. The Company expects to deliver these jackets in sequence through Q1 2023.

As a result of this, H&W has conducted a review of its future operations at both Methil and Arnish and whilst it remains important to bid for larger fabrication programmes (fixed and floating structures), the gestation period from the inquiry stage to the contract award stage can be as long as eighteen months.

With a focus on generating as much revenue as possible and to build a consistent baseload of revenues, going forward the Company will instead be focusing more heavily on smaller contract values of between c.£4 million and c.£10 million per contract for Methil and Arnish. These contracts will be for the fabrication of specific component parts, transition pieces, tubulars, pipework and other such bespoke items for large wind farm projects. The Company believes that servicing multiple clients with smaller orders simultaneously will reduce the dependence on one single, large client and will significantly de-risk the operations of both facilities.

The 450 MW NnG wind farm is 15km off the coast of Fife and is owned by EDF Renewables and ESB. The offshore wind farm will be equipped with 54 Siemens Gamesa SG 8.0-167 DD turbines with a tip height of 208m. They will be mounted on foundations laid at a water depth of up to 55m.

Once fully operational, it is expected to generate electricity for around 375,000 homes, or all domestic properties in a city the size of Edinburgh, and to displace 400,000 tons of CO2 annually. LCCC awarded it a CfD in February 2015, with a strike price of £114.39/MWh. The first turbines are scheduled to be operational in time for the wind farm to begin generating power in 2023, with completion scheduled for 2024.

Saipem is the EPCI contractor for foundations across the wind farm. This includes supply and installation of the 2 substation jackets, using Saipem 7000. Saipem will also undertake T&I of the topsides.

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