Threatened ONGC hires Japan Drilling's Chikyu

Vol 18, PW 11 (29 Jan 15) People & Policy

Sometimes threats work! ONGC has capitulated under pressure from Japan Drilling and is hiring company rig Chikyu for its gas hydrate research programme.

Astonishing, given that Japan Drilling was sole valid bidder in the tender and quoted Rs619cr ($101m) for the job - double ONGC’s internal estimate of Rs300cr ($50m). Japan Drilling president Yuichiro Ichikawa said in November the Japanese government would withdraw funding for the research programme if ONGC didn’t hire Chikyu.

His threat worked: on January 6, ONGC agreed to award the contract to Japan Drilling at the 17th steering committee meeting chaired by oil secretary Saurabh Chandra, called to review project progress. Chandra’s move is in sharp contrast to decisions taken by the 15th and the 16th steering committee meetings chaired by then special secretary Rajive Kumar.

In the 16th steering committee meeting, held on October 29, it was decided ONGC should consider extending the work timeframe to include 2015-16, so it could attract more bidders. Members even considered relaxing the tender criteria to attract more offers.

This was rejected by the technical committee on November 7 saying it would compromise data quality but it agreed to change the work schedule. “Chandra opposed this,” says a source present at the January 6 meeting.

“We had no option but to hire Japan Drilling.”