Rig work switch threat to 2000 jobs in region

Feb 12 2009 by Chris Knox, The Journal

THE creation of over 2,000 jobs will be scuppered if oil company SeaDragon Offshore succeeds in pulling the construction of a drilling rig out of the North East, MPs have warned.

North East MPs are working to prevent the collapse of a scheme to make one of two rigs at Haverton Hill shipyard, near Billingham, which was hoped to create more than 1,000 jobs in the region.

SeaDragon, the firm behind the project, had signed a contract with a group of local companies known as the Tees Alliance Group (TAG) to complete fabrication work on the rig, but is now looking to terminate the agreement in favour of completing the work in Singapore. It was hoped that both rigs would be completed on Teesside, however, one is now on its way to the Far East, while the other is moored at Rotterdam while rescue talks continue.

One reason given by SeaDragon for the decision is that TAG clocked up over £5m in debt as part of its activities outside of the drilling rig project, a breach that went against the conditions of the contract and which raised questions about its ability to complete the job on time and to budget.

However, a representative of TAG has said that this is not the case and that SeaDragon is looking to cut down their costs by employing cheap labour abroad. TAG also said the project would have been operational by next summer if completed in the North East, as opposed to early 2011 if it goes abroad, which would see SeaDragon lose around £40m in downtime.