Pride objects to ONGC terms for 5 jack ups

Vol 7, PW 4 (07 May 03) Exploration & Production

WE SHOULD know by latest June the winners of an ONGC contract for five offshore jack-up rigs.

ONGC has divided the five rigs into three categories: 1A and 1B2 are where customs duty has to be paid, while 1B1 are Petroleum Exploration Licence or Mining Lease areas exempt from customs tariff. ONGC wants one rig for the 1A area and two rigs each for the 1B1 and 1B2 areas.

Five companies submitted bids on 28th April: Transocean is offering three rigs; Pride International two; Noble Drilling two; and Great Eastern and Atwood Oceanics one each. Industry sources tell this report the real competition is between Transocean, Pride and Noble because both Great Eastern and Atwood's rigs are still under construction and unlikely to be ready when ONGC wants them.

ONGC surprised bidders four days before the bids were submitted by saying it would neither allow them to question the bidding terms or seek further clarifications. Pride for instance is unhappy with the conditions and wrote to ONGC objecting to two terms in the bid.

First, the condition that ONGC will provide services such as water and diesel free for only the first seven days of a rig breakdown but after that will begin charging. "Pride's view is that the contractor should not be made to pay for these services even after seven days because in any case during the period of breakdown it does not get paid by ONGC." Second, Pride wants ONGC to pay any customs tariff on rig spares for PEL areas in the unlikely event that the central government withdraws the customs tariff exemption.