Mumbai: State-owned Shipping Corporation of India will invest close to Rs440 crore, or $100 million, to buy five offshore support vessels to meet rising demand in the offshore oil exploration and production sector.
“We have received offers (from builders) and the evaluation process will start now,” said Umesh C. Grover, director, technical and offshore services at SCI. Such vessels, if built from scratch, cost about $20 million. SCI is looking for vessels that can pull up to 70 tonnes.
With the mini-ratna status accorded to it by the Union government, SCI has financial freedom to make capital investments of up to Rs500 crore without taking prior approval from the shipping ministry.
In the next round of fleet expansion plans, the Mumbai-based shipping line plans to acquire platform supply vessels, multi-support vessels and geo-technical vessels.
These vessels will help oil explorers, such as state-owned ONGC Ltd,to continue exploring for fuel from offshore oilfields along India’s coast.
SCI’s offshore fleet has stagnated for the last 20 years. Currently, it has 10 support vessels with a pulling power of 60 tonnes. These vessels are 22 years old and will have to be put out of commission in about eight years.
The offshore business contributed about Rs70 crore to SCI’s profits for the year ended 31 March 2006. The firm forecasts profits from offshore business to remain stable for the current fiscal year.
SCI’s offshore business revenues comes mainly from ONGC, which hires these vessels to meet its exploration and production needs on the east and west coasts of the country.
Local shipowners are not able to meet rising demand for supply vessels from oil explorers including Reliance, Gujarat State Petroleum Corporation, Hardy Oil, Cairns Energy, British Gas and ONGC. Only 30% of India’s supply vessel needs are supplied by lndian shipowners.
Unlike the normal shipping business, where ships are hired either on voyage charter (for a particular journey) or on time charter (for a certain time), offshore support vessels are leased for a period three to five years, making them a stable revenue generator.