At last: ONGC receives market rates for jack-ups

As we predicted ONGC will have to pay signiciantly higher day rates than what it's paying now following a tender to hire or replace six Baker Marine Class, Marathon LeTourneau or Levingston design jack-ups where price bids were opened on July 15.

ONGC received an unwelcome surprise when the lowest Effective Day Rate (EDR) offered by Dubai-based Shelf Drilling for CE Thornton and FG McClintock was $42,270. This is significantly higher than the $26,000/day rate agreed in January 2019 with Jindal Drilling for Discovery-I.

Thornton came off its ONGC contract in March 2019 and is 'stacked' in Indian waters; McClintock came off its contract in February 2019 and is 'ready-stacked' off India. Ranked second was Jindal offering $44,300/day for Virtue-1, which ended its last ONGC contract in May 2019.

Next came Greatship with Greatdrill Chaaru at an EDR of $46,500; Greatdrill ends its current ONGC contract in April 2020. Foresight Drilling offered Vivekanand-1 and Vivekanand-2 at $47,900, both coming off their ONGC contracts in October 2019.

"The rates in this tender are in line with industry standards," says a driller. "Until now contracts were signed at $26,000 to $27,000/day but these are not viable rates."

ONGC calculated its own price for each rig based on the Quality and Cost Based Selection (QCBS) method where it considers rig quality not just price. "High spec rigs will get a higher rate," we hear.