ONGC proposes welcome new boat contract

Vol 19, PW 3 (08 Oct 15) People & Policy

ONGC is offering an innovative new model for the long-term hire of Offshore Supply Vessels (OSVs) in a move applauded by contractors.

Under the present system ONGC hires vessels owned by contractors. But under a proposed new contract 12 ONGC-owned OSVs will be leased to contractors for operations and maintenance for at least 20 years after which the vessels will be sold to the vessel operators.

This 'bareboat charter-cum-demise' contract will be the first of its kind in India. ONGC invited EoIs on August 20 and met vessel owners on September 1 for comments and suggestions before preparing a tender.

Twenty vessel operators attended, including Greatship, GOL Offshore, Great United Energy, HAL Offshore, TAG Offshore, Samson Maritime, Shipping Corporation of India, and Global Offshore Services. One participant says ONGC made it clear it would lease a maximum four OSVs to each successful bidder.

"We can bid for as many vessels as we want but ONGC will give no more than four in each tranche to spread risk," he says. "We're fine with this.

" As expected loud objections greeted ONGC's suggestion that winning contractors should submit a bank guarantee equivalent to lease rent for four years plus a portion of the vessel value as security deposit. "There's no need to do this as ownership and insurance (of the vessel) remains with ONGC during the lease period," we hear.

"Submitting such a large guarantee will mean the day rate will increase defeating the commercial viability of this exercise."