No response to ONGC tender for floater

Vol 16, PW 2 (09 Aug 12) Exploration & Production

A sharp rise in international drilling activity over the last few months in the Gulf of Mexico, North Sea and Southeast Asia seems to be keeping drillers away from India.

Yet disgruntled contractors say ONGC has only itself to blame for a flop tender to hire a dynamic positioning system floater to drill in water depths of 1300 metres for two years. No bids came in by ONGC’s July 13 deadline, even though six companies were interested and prevailing rates are as high as $350,000/day.

ONGC even postponed the original June 29 deadline by two weeks after requests from Aban Offshore, Great Offshore and ABG Shipyard. Transocean, ArcticMorNefteGazRazvedka, and Jasper Offshore also stayed away, apparently because ONGC won’t pay prevailing day rates.

“There is enough work elsewhere,” says one bidder, who stayed away. “Nobody wants to be hostage to ONGC’s ridiculous terms.

” ONGC, he explains, loads risks onto drillers and keeps itself safe: for instance, ONGC will pay the selected contractor a (lower) ‘non-operating day rate’ if the rig is unable to drill because of unfavourable weather conditions and not the (higher) ‘operating day rate’ as is the norm everywhere. Even after it opens technical bids, ONGC typically takes up to four months to open price bids, and expects rig offers to remain valid.

After opening price bids, ONGC forces the lowest bidder to further lower its rate. “This approach works if work is scarce globally,” we are told.

“But not in today’s conditions.” ONGC floated this tender to replace Transocean Discoverer Seven Seas, which it released in February and wants the selected rig mobilised by October 31.

ONGC can re-issue the tender or choose to extend its current contract with another rig like Vantage Drilling’s Platinum Explorer, Deepwater Drilling-managed Noble Duchess, Transocean-owned Actinia or Northern Offshore’s Energy Driller.

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