BG and ONGC might 'pool' rigs for short-term job

Vol 15, PW 3 (11 Aug 11) Exploration & Production

British Gas and Cairn India are learning the hard way that finding rigs for short-term assignments in India can be frustrating.

Some suggest the answer is for smaller E&P players to copy BG and consider pooling resources with larger operators like ONGC, which has enough jack-ups on hire on long-term contracts. BG executives were again disappointed when the company received bids in June in its fourth attempt to hire a rig to drill wells at the Panna and Mukta fields offshore Mumbai.

BG wants a jack-up by October 15 to drill six wells at the Panna field and another to drill two wells at Mukta, also by October 15. Only one of the rigs offered by bidders met BG’s mobilisation requirements: Ensco offered jack-up Ensco 53 for the Panna assignment, quoting $93,000/day plus mobilisation and demobilisation charges of $12m.

BG began negotiating with Ensco but on July 21 learnt from the market that Ensco 53 had won a better rate with Petronas for a 90-day assignment, followed by a year-long assignment with Talisman Energy. For the Mukta assignment, Transocean offered GSF Magellan and Saipem offered Perro Negro 6.

Both Transocean and Saipem were meant to confirm the availability of their rigs by July 15. But Saipem could not confirm Perro Negro’s availability and Transocean said GSF Magellan would be available only from November, too late for the October 15 deadline.

BG opened price bids anyway in the last week of July to discover GSF Magellan was offered at the high rate of $140,000/day plus mobilisation/demobilisation charges of $16m. Perro Negro 6 was offered at $124,000/day plus mobilisation/demobilisation charges of $10.6m.

BG is now talking to ONGC about sub-contracting a rig for Mukta.