The number of bids India’s Oil and Natural Gas Corporation Ltd (ONGC) has received for a tender it put out for rigs used for deep-water exploration indicates that the global shortage of such equipment might be coming to an end. The unavailability of jack-up rigs had limited the exploratory activities of several companies including Reliance Petroleum Ltd and Gujarat State Petroleum Corporation Ltd (GSPC). Jack-up rigs are required for deep-water drilling.
In response to its tender, ONGC received offers for 17 jack-up rigs from nine companies. The state-owned explorer and refiner had asked for two rigs for a period of five years.
ONGC has the rights to explore almost half of the blocks awarded by the government under six rounds of its new exploration and licensing policy (NELP). It currently has 27 offshore rigs; 20 of these are chartered while the rest are owned by it. The company already owns five jack-up rigs.
Indian firms such as Mercator Lines Ltd, Jindal Drilling and Industries Ltd, Aban Offshore Ltd, Mauritius-based Essar Oil Fields and Services Ltd (EOSL), a 100% subsidiary of Essar Shipping Ltd, Greatship India Ltd, the wholly-owned subsidiary of Great Eastern Shipping Company Ltd, Jagson International Ltd and Great Offshore Ltd have applied for the contract. These firms will face competition from KCA Deutag, a wholly-owned subsidiary of Aberdeen and Scotland-based Abbot Group Plc., the world’s largest offshore platform drilling contractor in the North Sea and the Caspian region and Japanese offshore drilling contractor Japan Drilling Co. Ltd.
The winning bidder will earn $200,000 (Rs86 lakh) a day for each rig, or $730 million for the five-year period. “Rig owners are interested in long-term contracts. That’s the reason why ONGC has received so many offers,” said an official with Jindal Drilling who did not wish to be identified. ONGC will finalize the deal within 90 days.
Jindal, Mercator and Greatship India are building four jack-up rigs at Singapore’s Keppel FELS Ltd, the world’s top designer and builder of jack-up drilling rigs.
Great Offshore, which was demerged from Great Eastern Shipping following a family split last year, is building a jack-up rig at Bharati Shipyard Ltd in Maharashtra. At current prices, a jack-up rig costs about $180-200 million to build from scratch.