Cairn told to abandon reverse auction nightmares

Vol 23, PW 2 (14 Nov 19) Exploration & Production

Cairn India is facing calls to scrap its reverse auction process for seismic survey, exploratory drilling and other assignments at OALP-1 blocks.

Cairn unsuccessfully held reverse auctions over October and November for seismic contracts at 14 of 41 blocks it won in OALP-1. In October it held an auction for eight blocks where only one or two contractors participated and no contracts were awarded.

On November 5 it held another reverse auction for 2D and 3D surveys at six blocks: Rajasthan blocks RJ-ONHP-2017/3 and RJ-ONHP-2017/4; and Gujarat blocks CB-ONHP-2017/1, CB-ONHP-2017/4, CB-ONHP-2017/7 and CB-ONHP-2017/10. In a reverse auction, a price is given on screen which bidders are asked to undercut without knowing who has offered it.

"But this time (in the November 5 auction) Cairn put a price on its screen and asked bidders to either accept or reject it," says a source. This instruction was so confusing no bidder participated.

"Cairn is looking for cheap rates," comments a contractor. "The prices they want are unworkable; we did not participate."

Yet another source wonders how Cairn arrived at the price it posted on its reverse auction screen on November 5 for the seismic contracts. "Cairn’s way of holding reverse auctions is open to manipulation," he says.

"There’s enough (seismic) work in the market and no need to be desperate (for Cairn contracts)."