DGS rules blamed for ONGC rig tender delay
ONGC has been forced to delay two jack-up tenders because of stringent Directorate General of Shipping (DGS) orders in force since February 24 (2023).
"ONGC needs six new jack-ups," says a source. "It was supposed to issue the tender this month (April) but has pushed that back."
Also delayed is a separate tender for two jack-ups. "This tender is for the shortfall of two rigs from an earlier tender for 12 jack-ups," adds our source.
The DGS order directs that within two years, all rigs and barges operating in Indian waters that adhere to International Maritime Organisation (IMO) standards from 1979 must upgrade to a minimum of 1989 standards. But drillers stress it can take between 12 to 18 months to upgrade a 1979-standards rig to 1989 standards, depending on the weather, spare parts, equipment availability, and the dry dock.
Of the 38 rigs ONGC owns and hires, 25 adhere to 1979 standards, much weaker than the 1989 code, which has stricter onboard safety and firefighting rules. "ONGC chairman AK Singh and IADC (International Association of Drilling Contractors) have written to the ministry seeking clarity on the 1979/89 MODU norms," we hear.
"We expect the DGS to respond this month (April)." But if the DGS provides no clarity, it will impact ONGC's drilling plans.
"There is a huge shortage of rigs in the international market," we are told. "When 25 rigs go out of action for conversion, the impact on ONGC will be severe."
In the 12 jack-up rig tender issued on July 26 (2022), ONGC could hire only ten rigs. "There was a shortfall of two rigs in Category 2 from this tender, which ONGC plans to hire in the new tender," we learn.
ONGC wanted to hire four jack-ups in Category 2 of the 12-jack-up tender for workovers offshore Mumbai. Only two companies confirmed the availability of their rigs a day before ONGC opened price bids to hire Marathon LeTourneau (MLT) or Baker Marine Class (BMC) rigs on November 18 (2022): Aban Singapore bid lowest with Aban-IV, quoting an EDR of $66.204.95; Egypt's ADES followed with Admarine-IX at an EDR of $69,499.30.