ONGC sets new 19-year age limit in MSV tender

Vol 24, PW 15 (17 Jun 21) Exploration & Production
       

As expected, ONGC has set a maximum age limit of 19 years in its tender to hire four multi-purpose support vessels (MSVs) for five years.

ONGC issued the tender on June 8 (2021) with a July 19 (2021) bid deadline and an online pre-bid scheduled for June 21 (2021). ONGC wants to replace four MSVs coming off-contract late next year (2022): 1982-built diving vessel HAL Anant, 1983-built Seamec III, 2010-built Nusantara and 1983-built Oceanic Installer.

ONGC hired the MSVs in February 2020 on two-year contracts, but most of them, except Nusantara, will not qualify this time. As reported in our May 6 (2021) issue, ONGC backed down and decided to impose age restrictions for MSVs after Singapore-based Ultra Deep Solutions complained to the oil ministry about ONGC giving contracts to older vessels.

In a July 6 (2020) letter to the oil ministry, Ultra Deep said ONGC's Diving Support Vessel (DSV) tenders are "designed" to exclude what it describes as 'modern' vessels, similar to those in its fleet. But hiring newer vessels will be a challenge for ONGC.

"Not many vessels are likely to be offered," adds a source. "Even if they get offers, the rates quoted will be higher than what ONGC pays now."

ONGC has a reputation for negotiating rates down. "They demand the lowest possible rate for the contract," we learn.

"This time, it won't be possible." MSVs working today with ONGC fetch approximately $55,000/day, according to a vessel provider.

But our source believes with the new 19-year age restriction, ONGC might have to pay up to $75,000-80,000/day. He adds that if ONGC wants new vessels, the prices will go up since most contractors have to repay loans to buy the vessel and have not recovered the cost.

"As for the older vessels, contractors have already recovered the cost, so they can offer them at lower prices," we hear.