Megha doubts grow after ONGC issues 27-rig LoA

Vol 22, PW 20 (25 Jul 19) Exploration & Production

More than two months after bids were opened, Megha Engineering & Infrastructures is under scrutiny to see if it can keep its promise to deliver 27 new onland drilling rigs to ONGC on time.

Multiple sources tell this report the Hyderabad-based engineering conglomerate bidding with Italian contractor Drillmec received its long-awaited Letter of Award (LoA) from ONGC on June 21 after bidding $550m for the 27-rig contract in May, beating rivals Schlumberger with Chinese contractor CTPDC and US contractor NOV with Indian rig manufacturer BHEL. "All the best people have left Drillmec," says a source.

"In the past three years the company has delivered nothing." He adds ONGC made a "serious mistake" in believing Megha - with no rig manufacturing experience - could deliver 27 rigs after its December 2018 acquisition of Italian rig specialist Drillmec from debt-laden parent company Milan-listed Trevi Finanziaria Industriale (Trevi) for €140m ($158m).

"No money (between Trevi and Megha) has changed hands, you only need to look at Trevi's last trading statement." he says.

"Two years ago 400 people (in Italy) were working at Drillmec but today there are only 100 people." Similar doubts centre on joint venture Drillmec India (Pvt) Ltd, set up eight years ago with Kakinada Marine and Offshore Complex to build and deliver rigs to the Indian market.

"Drillmec India is an empty shell," we hear. "It produces nothing; on 1000-sq metres of land in Kakinada there is nothing there."