Essar protests unfair ONGC ban over Wildcat

Vol 15, PW 22 (17 May 12) People & Policy

Essar is accusing ONGC of going too far with its April 11 order banning the $30bn Mumbai-based group from all tenders for two years simply because it backed out of a drilling contract.

“ONGC’s ban is totally unjustified,” an angry Essar source tells PETROWATCH. “We’ve asked them to re-consider as we did not act ‘with any mala fide intention’ (in bad faith).

” Essar, he adds, sent protest letters to ONGC on April 18 and on April 23 but is yet to receive a reply. “At most ONGC should have banned us from drilling tenders,” we are told.

“There’s no justification for banning us from other tenders.” Essar feels singled out by ONGC and alleges the ban contradicts clause B.

9 of ONGC’s own Bid Evaluation Criteria and paragraph 3 of the order hiring semi-submersible Essar Wildcat, which both state: “In case the successful bidder fails to mobilise the drilling unit within the stipulated mobilisation period, ONGC reserves the right to terminate the contract. Contractor will also be put on holiday (banned) from bidding to hire out drilling units for two years from date of cancellation of ‘firm order’.

” Essar further accuses ONGC of double standards as it did not impose any ban on Mumbai-based Great Offshore when it failed to mobilise new build jack-up Samed Shikhar by May 14, 2009. It only cancelled the contract and encashed the $3.8m bank guarantee.

ONGC was similarly lenient with Norway’s Sevan Marine when it failed to mobilise new build drillship Sevan Driller-II by December 2010. “Why are we targeted” wonders Essar.

“Why should our other group companies (who do business with ONGC) be penalised” Besides its drilling business, Essar has significant interests in the offshore construction sector.