ONGC wants new Jindal rigs at old Aban rates

Vol 18, PW 7 (20 Nov 14) Exploration & Production

Some say it doesn’t make sense but ONGC is nonetheless likely to ask Jindal Drilling to lower its day rate for two (modern) new-build Category-IV rigs to match lowest bidder Aban’s price for two (old) Category-I rigs in its 12 jack-up tender.

ONGC opened Category-I price bids on September 19 and negotiated Aban down to an Effective Day Rate of $80,001 (not including 12.36% service tax) for Aban-III (drilling for ONGC on the west coast but coming off contract on December 23) and Aban-IV (whose ONGC contract ended on July 13). ONGC opened Category-IV bids on November 5 to find Jindal sole bidder offering new-builds Jindal Explorer at $122,157/day and Jindal Pioneer at $122,433/day.

Too high, says ONGC’s Executive Purchase Committee, which is considering a proposal to ask Jindal to match Aban’s rates. “This is ridiculous,” exclaims a source.

“Category-IV is for new rigs built after April 2004 or under-construction; Category-I is for much older rigs. ONGC wants a modern rig with much higher specs in Category-IV.

How can it insist day rates should be the same as Category-I?” He adds a Category-IV rig costs around $200m while a Category-I rig costs around $60m. “It’s like comparing a new car (Category-IV) with a used car (Category-I),” he adds.

“ONGC will save time and money with Category-IV rigs.”

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