Oil and gas service provider Petrofac has announced that it has terminated a contract with Chinese builder Shanghai Zhenhua Heavy Industries (ZPMC) for the construction of a deepwater multi-purpose offshore vessel.

Petrofac said the cancellation was due to issues with ZPMC’s performance. “It is regrettable that it has become necessary for us to take this decision, and the board is now reviewing its options,” said Ayman Asfari, group chief executive of Petrofac.

Petrofac awarded the contract to build the JSD 6000 design vessel to ZPMC in January 2014, and the vessel was scheduled for delivery in early 2017. The project cost for the vessel is around the $1bn mark, and was to provide Petrofac with access to high-end turnkey opportunities in the high growth deepwater and SURF markets.

“There must be serious technical difficulties at the yard for Petrofac to abruptly cancel this unit. Losing this unit and the UDS DSV in recent months will have a massive impact on ZPMC as these are sizable orders,” commented Mike Meade, CEO of Singapore offshore broking firm M3 Marine.