Asian Oilfield surprises with rock-bottom quote

Vol 18, PW 19 (21 May 15) Exploration & Production

Seismic contractors in India are so desperate for work they'll apparently do anything to win contracts.

That's the criticism leveled against BSE-listed Asian Oilfield and Alpha Geo from rivals for quoting unrealistic rates and 'spoiling the market'. Take Asian Oilfield, shortly expected to receive a LoA from Oil India to shoot 180-lkm 2D at the Deomali and Namchik Jairarnpur Extension PEL area in Arunachal Pradesh.

When bids were opened on May 5 Asian bid lowest quoting Rs8.52cr ($1.3m) followed by IOT Infrastructure & Energy Services which quoted Rs22cr ($3.5m). “Asian quoted almost half Oil India’s internal estimate of Rs17cr ($2.7m),” says a shocked competitor.

Asian quoted a similarly low rate for an ONGC contract to shoot 250-sq km 3D at the Baramura Bulge area of Tripura, announced to the BSE on May 13. Asian said it had been awarded the LoA for the job which it must begin by October 1, 2015 and complete by May 2016.

Asian was lowest bidder quoting Rs51.3cr ($8m) followed by SK Projects which quoted Rs129cr ($20m) and Alpha Geo Rs130cr ($20.5m). ONGC’s internal estimate was Rs97cr ($15m).

These prices include service tax, manpower costs, setting up camp, equipment depreciation and crop compensation. “Asian is desperate because it hasn't had any work in India for a year,” adds another source.

“How can they execute the contract and pay crew salaries?" Each crew with 15-20 members costs around Rs15 lakh/month ($23,600) in salaries.