ONGC extends jack-up rig deadline to 21st November

Vol 10, PW 15 (16 Nov 06) Exploration & Production

ONGC has extended by two weeks to 21st November the deadline to receive bids for its tender to charter hire two newly built jack-up rigs.

A source in a drilling company said the extension from the earlier deadline of 7th November is to compensate for ONGCs own delay in clarifying concerns raised by bidders in the pre-bid conference. Bidders have three major problems with this tender.

First, ONGC wants to hold drillers responsible for damage to underground formations during drilling. Second, ONGC wants to stop paying drillers after 48 hours if the rigs legs cannot be retracted by then before moving to a new location.

Third, bidders want ONGC to raise its antiquated mobilisation fees. In its clarifications, ONGC has partly conceded bidders demands.

Says a driller: The clause about holding drillers responsible for underground damage has been completely removed. On the second issue, ONGC now says the driller will be put on zero rate after seven days if the rigs legs cannot be retracted before that.

This is completely against the concept of rig hiring worldwide, says an industry source. But we dont have a choice as ONGC is unwilling to listen.

Bidders are happy that ONGC has agreed to raise mobilisation fees. From offshore Singapore, Middle East and Far East these have been raised to $2m from $1.5m; from anywhere else other than the above regions or Indian waters ONGC will now pay $5m instead of the earlier $3m.

Mobilisation fees from Indian waters remain unchanged. Even here, bidders say the increase is too little, but do we have a choice ONGC wants two newly built jack-up rigs that can drill either in 300 or 350-feet water depth and with 10,000-psi BOP stacks.

Both rigs should be mobilised by May 2009 and will be on five-year contracts. Industry sources say day rates for newly built jack-ups show no sign of falling even though crude oil prices have declined.

Drillers say ONGC should expect to pay around $270,000 per day, if recent contracts are anything to go by.