Companies launch bid to keep oil rig contract in North East

Feb 28 2009 by Iain Laing, The Journal

A FRESH bid to stop the £300m SeaDragon oil rig contract from being moved from the North East to Singapore was launched yesterday by two manufacturing companies.

Darlington-based Cleveland Bridge has teamed up with South Shields fabrication specialist McNulty Offshore Construction Limited to table a bid with engineering giant SeaDragon to build at least one of the two rigs in the Haverton Hill shipyard in Stockton.

SeaDragon terminated its contract with the Tees Alliance Group (TAG), which is made up of companies including Cleveland Bridge which were due to carry out the work.

It said that the TAG did not have the technical expertise necessary to complete the project and denied claims that it was trying to get the work done more cheaply elsewhere.

Industry leaders and North East MPs have been working to dissuade SeaDragon from ending the contract which had been hoped to create 1,000 jobs directly and the same again in the supply chain in the North East.

Cleveland Bridge MD Brian Rogan explained: “We are putting proposals to SeaDragon with a view to giving them an alternative option than to take the rigs to Singapore.

“It’s early days. The first meeting is today and we’ll see where we go from there. The whole idea is to safeguard jobs in the North East.”

If the bid is successful, he said it may be possible to retain some or all of the 140 Teesside-based jobs earmarked to go at Cleveland Bridge after it was told by SeaDragon to scale back work on the project.

TAG, which is still trying to resolve contract talks with Sea Dragon, said it would continue to work with Cleveland Bridge.

A spokesperson said: “TAG will still go on. We are looking at future work including a joint project with Cleveland Bridge.”

TAG is bidding for two other projects that could generate millions of pounds of investment and create hundreds of local jobs.

One is said to be a similar size to the SeaDragon project, while the other is a renewable energy scheme. A decision is expected on the first of these projects “within weeks”.

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

Frank Cook, MP for Stockton, and Newcastle MP Nick Brown have been campaigning for help to keep the work in the UK with Business Minister Peter Mandelson.

Mr Cook said: “In my discussions with SeaDragon’s chairman it was very clear that he had been subject to a great deal of disinformation about our ability to undertake this kind of work on Teesside and I have no doubt that this has been a critical factor in their move to withdraw from the contract with TAG.

“I made very clear in the strongest terms that these smears against our area were totally without foundation and that rigs built on the Tees – some far more complex than the SeaDragon units – have been operating successfully for decades and nobody can deny that.

We are putting proposals to SeaDragon with a view to giving them an alternative option than to take the rigs to Singapore