Oil India Ltd (OIL), one of India’s leading oil and gas exploration companies, is calling for bids for two onshore rigs with a capacity to drill to a depth of 5,000m, in an effort to meet its exploration needs within the country.
OIL has 14 (exploration) blocks in the country and several in West Asia and Africa. Its effort to source the rigs comes at a time when there aren’t enough such vessels to meet rising global demand.
The new rigs are being deployed for exploration work in the company’s Assam, Rajasthan and Orissa blocks, and will increase the size of its fleet of oil rigs to 15. “These rigs will be used only for OIL’s assets within the country,” said a senior company executive who did not wish to be identified.
“The rigs will have a 1,400-2,000 horse-power capacity. We have even set up a small group for rig procurement in the backdrop of a global shortage of rigs,” said the executive. The executive declined to estimate rig costs but an onshore rig typically commands a daily rental of $25,000 (Rs10.75 lakh)-$40,000.
Oil industry analysts who did not wish to be identified said that since OIL has a number of hydrocarbon blocks in the country, it could negotiate a better price, if it decided on a longer contract period of around three years. “It depends how it structures the deal,” said an analyst.
However, overseas oil rig companies are not expected to actively participate in the contract as costs for bringing in and setting up foreign onshore rigs in India are high. There are only a few domestic onshore rig companies including Shiv-Vani Oil and Gas Exploration Services Ltd and John Energy.
OIL had a net worth of Rs5,848.3 crore and made a profit of Rs1,689.90 crore in 2005-06.
“OIL is facing a huge challenge. The sooner it gets these rigs the better. It has been trying to get them for a year but has not been able to get access to the right type of rigs,” said another oil sector analyst who did not wish to be identified.