Impatient ONGC queries bids in 27-rig tender

Vol 22, PW 9 (21 Feb 19) Exploration & Production

ONGC is moving at "lightning speed" to evaluate bids from three companies in its tender to buy 27 onland drilling rigs with 1500-2000-hp capacities, according to bidders.

"Our first set of queries from ONGC on our bid came yesterday," confirms a source from the Schlumberger-China Petroleum Technology & Development Corporation (CPTDC) consortium on February 16 after it bid by the January 10 deadline. "Price bids should be opened in March."

Very soon ONGC will also send queries on bids from the other two consortia: US-based National Oilwell Varco (NOV) with state-owned Bharat Heavy Electricals (BHEL) and Italian driller Drillmec with Hyderabad-based Megha Engineering & Constructions. Any contract award however might take time.

A rival bidder claims Drillmec's financial bid will come under intense scrutiny because its troubled Italian parent company Milan-listed Trevi Finanziaria Industriale (Trevi) on December 31 (2018) announced a "financial restructuring" programme triggered by a "net consolidated debt" of €686m ($775m). Others counter that only Drillmec partner Megha's balance sheet will face scrutiny because it is lead bidder with a letter of support from Drillmec to sell it rigs if they win the tender.

Further complicating matters is Trevi's December 4 (2018) announcement that it had accepted a "binding offer" from Megha parent company Megha Engineering & Infrastructures to buy Drillmec and another company, Petreven, "based on an enterprise value equal to €140m on a debt free basis."

ONGC is also facing questions about why it has set aside a budget of $25m for each rig which industry sources say is "undeniably" very high. "These days you can buy a 2000-hp drilling rig package for $15m," claims a driller. "Why has ONGC budgeted $25m per rig? This could attract attention from the (state-controlled accounting watchdog Comptroller and Auditor General) CAG." Who will win the tender? Still unclear but as Indian company-led consortia, both BHEL-NOV and Drillmec-Megha will benefit from the government's 'Make in India' policy that encourages companies to source equipment locally allowing them to claim 'price preference' over foreign bidders. In 2011, Drillmec set up a JV with Kakinada Marine and Offshore Complex (KMOC) called Drillmec India to build rigs in Kakinada in Andhra Pradesh. Among the other rig manufacturers who showed interest in ONGC's tender issued on September 13, 2018 but stayed away were BOMCO; MHWirth; Bentec; SJ Petroleum Machinery; Herrenknecht and Precision Drilling.

Impatient ONGC queries bids in 27-rig tender

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