Worried rivals fear Deep in ONGC jack-up tender

Vol 17, PW 13 (13 Feb 14) Exploration & Production

ONGC has released its long awaited tender to hire 11 jack-ups on three-year contracts but bidders fear Ahmedabad-based Deep Industries will drag down rates as it prepares its maiden entry into the offshore drilling business.

“We've shortlisted three or four ‘warm-stacked’ (ready to mobilise) jack-ups," confirms Deep "We plan to buy one of them and bid her in this tender.” Says a rival bidder: “Deep could completely spoil the market like Jagson did.

” Last year Jagson quoted $81,596/day in ONGC's ten-rig tender forcing US-based Noble Drilling, which has four jack-ups in India, to indicate it would pull out two from India when their contracts end, after refusing to match Jagson's rate. But Noble is expected to offer Noble Kenneth Delaney to ONGC through Deepwater Drilling in this latest 11-rig tender.

Deep rejects allegations it will bid below market rates. "Nobody will work at a loss,” says a Deep source.

“We will bid a price we find viable." Deep said bidding rock-bottom rates would mean, "cutting corners later on, and we would not want to do that, especially in the offshore market which is completely different from the onshore market.

” In the offshore market, adds Deep, “cutting corners could lead to disastrous consequences in the event of an accident.” ONGC began selling tender documents on January 31 with a February 20 cut-off date.

Current international day rates for jack-up rigs are around $110,000/day.

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