Inexperienced Reliance shocks drillers with terms

Vol 5, PW 9 (20 Jun 01) Exploration & Production
     

Contractors attending the above meeting with Reliance came away shocked at the company's inexperience of drilling industry norms.

They were very naأ¯ve and totally unprofessional in their approach," said one contractor attending the meeting. "They seemed to have no clue about the business they are getting into." Senior Reliance managers Rajiv Ranjan and Ashutosh Garg apparently wanted the drilling contractors to set their own benchmarks and be prepared to pay penalties for any slippage.

Every one present was shocked," he adds. "We told them that this kind of practice was totally unrealistic and unheard of in the drilling industry.

We told them there are only two kinds of contracts: an incentive contract or a turnkey contract. Reliance was told that their concept of a contract was unacceptable because it was unworkable.

As a drilling contractor, I have no control over the other service providers who are involved in the job and so nobody will accept the kind of contract they have in mind. The incentive contract is the most common contract as the contractor gets bonuses for drilling faster.

The bonuses are then passed on to the drilling crew. Ranjan and Garg were apparently taken aback at the vociferous reaction of the drilling contractors and promised to get back to them.

Contractors feel Reliance is being given wrong advice by a former Mobil employee it has taken on as a consultant.