More problems in ONGC eight jack-up tender

Vol 20, PW 19 (15 Jun 17) Exploration & Production

There were no complaints at the May 9 pre-bid but sure enough trouble has again surfaced in ONGC's long-delayed tender to hire or renew eight jack-up contracts for three years.

More delays are likely as ONGC once again faces a dilemma over how to officially extricate itself from the 'blend and extend' concept it first proposed in November 2016 but informally discarded after the new tender was issued on April 11, 2017. Under 'blend and extend' ONGC wanted rigs hired before November 2014 to reduce rates and offered to compensate drillers with contract extensions.

But in one-to-one discussions with Dynamic Drilling, Greatship and Jindal Drilling this month (June) and last (May) ONGC tried to convince them to reduce rates for rigs on five-year contracts - but without offering contract extensions as compensation. As you'd expect, that's a hard sell! "Nobody will reduce rates without something substantial in return," comments an observer.

"ONGC contracts don't have a clause for such reductions." ONGC management meanwhile has broken its promise not to extend the June 12 bid deadline and has pushed this to June 30. Dynamic Vision is hired until February 22, 2018 at $109,000/day while Greatdrill Chhaya's contract is till February 13, 2018 at $108,759/day.

Jindal Star's contract runs till January 24, 2019 at $120,440/day and Virtue-I finishes its contract on May 5, 2019 at an ODR of $121,030.

LNG Summit