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    Norsk Hydro asks for fresh bids - cancels LoI with Farstad

    News // January 21, 2005
    As this issue of Offshore Shipping Online was about to be published, Norsk Hydro announced that it has decided to conduct a new round of invitations to tender for the procurement of a number of sophisticated supply vessels, and would not, after all, be signing a charter agreement for the ships with Farstad Shipping.

    According to a statement issued by Norsk Hydro, the company's internal auditors have uncovered flaws in the way the tender process was conducted that may have influenced the evaluation of tenders received.

    In June 2004 Hydro commenced a procurement process with the intention of chartering three supply ships for use in the company's operations on the Norwegian Continental Shelf. A letter of intent was sent to Farstad Shipping on December 1st, 2004.

    However, following allegations of irregularities relating to the procurement process, Norsk Hydro's management determined that the procurement process should be subject to review by the company's internal auditors.

    Hydro's auditors have disclosed what is described as a "breach of internal procurement procedures," which means that the company cannot guarantee that all bidders were treated equally. Technical information was reportedly handled in such a way that cameinto conflict with Hydro's procedures prior to tender opening.

    Norsk Hydro said there was nothing to suggest that any individuals profitedpersonally from the irregularities.

    "Due to the nature of the findings, we have decided to conduct a new round of invitations to tender so as to be absolutely sure that all bidders get equal and fair treatment. We will implement necessary measures to ensure that Hydro's procurement procedures are fulfilled and that the outside world has complete confidence in our procurement processes," said executive vice president Tore Torvund.

    A new tender round will now be held and all bidders who participated in the first round will be invited to tender. Invitations to tender will be sent to bidders in a couple of months.

    The Letter of Intent awarded to Farstad included an existing vessel (Far Symphony) for five years, and two new buildings for ten years, for which Farstad signed a Letter of Intent with Aker Brattvaag.

    Based upon the information received from Norsk Hydro, Farstad Shipping said it appreciated that Norsk Hydro needed to conduct a new round of invitations to tender.

    In a statement, the company said: "It is important to emphasise that Farstad Shipping had no knowledge that such an incorrect distribution of technical information had taken place. As a consequence of Norsk Hydro's decision, Farstad Shipping will receivecompensation from Norsk Hydro to meet expenses accumulated after the signing of the Letter of Intent."

    Farstad said it had yet to decide what action to take in relation to the new building contracts with Aker Brattvåg.

    The alleged irregularities apparently came to light following an anonymous e-mail.

    Farstad was informed about the decision at a meeting with Norsk Hydro on Wednesday of this week.

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