Bloomberg News

RWE, SSE to Fight Fluor Claim Over U.K. Offshore Wind Project

April 11, 2012

RWE AG (RWE) and SSE Plc (SSE) are preparing a counterclaim to one made by Fluor Corp. (FLR:US) relating to wind-turbine foundations on a North Sea offshore wind farm.

Greater Gabbard Offshore Winds Ltd., the joint venture between RWE and SSE, has “now formalized its counterclaim against Fluor for an amount potentially in excess to what Fluor is claiming,” Paul Coffey, chief operating officer at RWE Innogy GmbH, said in a conference call with analysts. Fluor’s claim is “in the order of 300 million pounds ($477 million).”

RWE and SSE are involved in a contractual dispute with Irving, Texas-based Fluor over the structures that support offshore turbines at the Greater Gabbard park. Fluor is principal contractor on the project in the North Sea. Fluor’s claim relates to time and costs incurred from additional testing and repairs it undertook on some foundations at the project, according to SSE.

SSE and RWE’s Greater Gabbard Offshore Winds venture deemed the foundations supporting 52 of the 140 turbines to be defective, SSE said in a March 30 statement. They “do not meet the standards required by the contract,” and Greater Gabbard Offshore Winds started a “formal contractual claim” against Fluor, SSE said.

SSE declined to comment beyond the statements when contacted by phone. A Fluor said he couldn’t immediately comment.

“We’ve installed monitoring equipment on the structures that we believe are defective to ensure they’re only run to the extent it’s safe to do so,” Coffey said in the call yesterday. All 140 foundations and 140 turbines are installed, with more than 125 generating power including some on defective structures, he said.

Increased Costs

Fluor said in a Feb. 22 statement that its 2011 results included a charge of $60 million from the 500-megawatt Greater Gabbard project, while 2010 was impacted by charges totaling $343 million from the facility. The project “experienced a number of issues which substantially increased the estimated cost to complete the project,” according to the statement.

Those included bankruptcy of major subcontractor Subocean Group Ltd., weather-related delays and low turbine and cable installation rates Fluor said in February 2011.

Arbitration, a form of dispute resolution, for the Fluor claim will be heard in June or July and the counterclaim from Greater Gabbard Offshore Winds will be heard next year at this time, Coffey said. “Both elements of the on-going dispute are the subject of a formal arbitration process,” SSE said in its March statement.

To contact the reporter on this story: Sally Bakewell in London at sbakewell1@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net


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Companies Mentioned

  • FLR
    (Fluor Corp)
    • $77.79 USD
    • 0.39
    • 0.5%
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