ONGC scraps early rig termination proposal

Vol 20, PW 2 (06 Oct 16) People & Policy

Behaving sensibly, ONGC has for once chosen to give in to industry lobbying and has scrapped plans to introduce a 'convenience' clause into rig contracts like the one it has for vessel contracts.

Such a clause would have allowed ONGC to terminate contracts after only 12 months and would have given drillers inconvenient nightmares as the costs of mobilising and de-mobilising rigs are much higher than for vessels. But ONGC's top management instructed the drilling services group not to send the proposal across to the Executive Purchase Committee.

This is a relief for drillers eagerly awaiting an ONGC tender to rehire or replace seven jack-ups and replace one floater whose contracts end between November 2016 and May 2017. In this tender expected in mid-October, ONGC has also decided to ask for standard jack-ups which can drill in water depths of up to 300 feet (91 metres) and not high-spec rigs equipped to drill in HP/HT conditions.

It was prompted to do this after a May 2016 query from the oil ministry over why expensive high-spec rigs are hired when standard jack-ups will do. "Drillers can still offer high-spec jack-ups but they must be content with rates for standard jack-ups," says a source.

Also interested bidders should note ONGC wants to hire a jack-up not a floater to replace floater Aban Ice. Apparently there aren't enough drilling locations for a floater.