Mumbai: India’s largest offshore drilling firm Aban Offshore Ltd is set to win a three-year, $550 million (Rs2,222 crore) deal from state-run Oil and Natural Gas Corp. Ltd (ONGC) for renting three jack-up rigs used for deep-water oil drilling operations, according to a person close to the development who did not wish to be identified.
The world’s biggest offshore drilling company, Transocean Inc., is also set to win a three-year, $361 million deal for renting two jack-up rigs to ONGC, according to the same person.
The price bids for the five rigs that ONGC wants to hire for a three-year period were opened on 2 August. The contract is for a fixed price without an escalation clause.
Chennai-based Aban Offshore had quoted $167,500 a day for each of the three rigs while Transocean offered a rate of $165,000 for its two rigs. ONGC had invited bids for five rigs because an existing contract for renting five rigs will end between December 2007 and January 2008.
The oil company had received offers for 10 rigs from five firms including Aban, Transocean, Premium Drilling, Jindal Drilling and Industries Ltd, Unitrade Gesellschaft India and Greatship (India) Ltd, the wholly-owned offshore oilfield service subsidiary of Great Eastern Shipping Co. Ltd.
Out of the 10 rigs on offer, three rigs of Aban (named Aban III, Aban IV and Aban V) and two of Transocean (named C.E. Thornton and F.G. McClintock) met the technical qualifications for opening of price bids. These five rigs are already rented out to ONGC for day rates ranging between $45,200 and $57,600. These rigs were hired out in 2004.
Soaring international oil prices are attracting oil firms to invest huge sums in prospecting for oil. This has boosted demand for jack-up drilling rigs. A jack-up rig currently fetches anywhere between $170,000 and $200,000 a day for the owner of the rig.
Though the rates quoted by Aban and Transocean for their rigs are close to the market rates, ONGC will pay more than twice the day rates of the existing contract for the five rigs that will end shortly.
In July, ONGC had hired two rigs, one each from Jindal Drilling and Industries Ltd and Great Offshore Ltd, for a five-year contract begining May 2009. The value of each of these contract is about $270 million over the five-yearperiod.
To win that contract, Jindal Drilling and Industries Ltd had offered its jack-up rig being built at Singapore’s Keppel FELS Ltd, for a day rate of $148,000, while Great Offshore, its rig under construction at Bharati Shipyard Ltd, for $139,900.