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India loses oil rigs to Mexico, UK

India loses oil rigs to Mexico, UK
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First Published: Wed, Jun 20 2007. 12 17 AM IST
Updated: Wed, Jun 20 2007. 12 17 AM IST
Indian oil explorers led by Oil and Natural Gas Corp. (ONGC) are losing rigs to rivals in countries such as Mexico and the UK as higher prices spur drilling, according to a report by service provider Baker Hughes Inc.
The number of rigs used in India slipped to 81 in May from 86 in January, Baker Hughes said in a monthly report on its website on 15 June. At the same time, the worldwide total excluding the US, Canada, Sudan and Iran, increased to 1,007 from 972.
Explorers paid record prices last year to hire drilling equipment as demand increased. Transocean Inc., the world’s largest offshore drilling contractor, and other operators have tripled hire rates in the last two years. India’s greatest need is for rigs that drill in water depths of up to 10,000 ft.
“In the next three years, about 18 semi-submersibles are coming out of yards,” said S.R. Agrawal, executive director of exploration and production for Essar group, the Indian steel maker and oil refiner. “India will need at least six to seven. And they simply can’t get it,” he added.
India has slipped behind the UK and Mexico in deploying rigs offshore, after contracts for drilling equipment by ONGC expired this year. The number of offshore rigs in India fell to 27 from 30 last month, and 32 in January, the report says. In January, India was the largest offshore rig user outside the US.
“The market for rigs is tight,” said Bill Paul, vice-president, consulting, with ODS-Petrodata, a company that tracks the offshore services market, in Singapore. “We don’t see any rigs becoming available in the next two years.”
Reliance Industries Ltd. is counting on offshore drilling equipment to produce as much as 80 million cubic metres of gas a day in India in 2009, nearly equal to the country’s current gas consumption, to meet a supply shortfall.
India is helping explorers to tackle the rig shortage by extending drilling deadlines in licence agreements, director general of hydrocarbons, V.K. Sibal, said on 29 May.
The number of offshore rigs used in the UK increased to 30 in May from 23 in January, and to 29 from 27 in Mexico, to find new reserves and arrest declining production. In West Asia, the number rose to 268 rigs from 263 in January.
The number of rigs searching for oil and gas in the US increased to 1,773 last week compared with 1,760 a week earlier, Baker Hughes said in a separate weekly report on its website last week. US and Canadian data are reported weekly, while international data is reported separately each month. Sudan and Iran, which are under US sanctions, aren’t included.
Archana Chaudhary in Mumbai contributed to this story.
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First Published: Wed, Jun 20 2007. 12 17 AM IST