Mumbai: Essar Oilfields Service Ltd has raised a Rs1,210 crore loan from an IDBI Bank Ltd-led consortium to fund the first two jack-up rigs being built in India, a top executive of its parent company said.

Jack-up rigs—or mobile platforms that can stand on the sea floor at depths up to 300ft—are commonly used for offshore oil and gas drilling.

Investment plans: Essar Shipping Ports CFO V. Ashok. The rigs are expected to join the firm’s fleet in June and October 2011, respectively.

The company is part of the Essar Group, whose interests range from steel to shipping to refining.

Essar Oilfields had placed the order for two jack-up rigs with India’s largest private shipmaker, ABG Shipyard Ltd, in 2008 at a cost of $440 million (Rs2,037.2 crore).

The rigs are expected to join its fleet in June and October 2011 respectively, and will be hired out to hydrocarbon explorers.

“The progress of rig building is good... A specialized team from Essar Oilfields is supervising the building process at the yard," Ashok said.

The rigs are being built with high-technology specifications, so that they can be deployed anywhere in the world, he added.

Rig rates, which were hovering around $120,000 a day in early 2009, are currently at $165,000 a day, according to market estimates.

“We are in talks with various exploration and production companies for deploying these rigs. But it is too early to finalize the deal," said Ashok. “Oil and Natural Gas Corp. (Ltd) of India will shortly come up with a tender for seven rigs, while other Indian explorers are also looking for rigs."

The executive said his company was also looking for a new contract for its semi-submersible rig “Essar Wildcat" after April, when its employment with Gujarat State Petroleum Corp. Ltd concludes.

The Essar Group plans to invest at least $1 billion in the oil drilling business in the next two years, Ashok said.

But Rohit Ahuja, senior analyst with Centrum Broking Pvt. Ltd, sounds a note of caution.

“Around 100 new offshore drilling assets would be supplied across the world over the next three years, which would add 20% to current world fleet," he wrote in a December 2009 report.

“Although these supplies would more or less replace around 25% of the existing rig fleet (more than 30 years old)," he added, “we believe the decline in demand for existing rigs due to lower crude prices compared to 2008, coupled with economic slowdown, could lead to an oversupply situation globally."