Romania sells 25 rigs to ONGC at bargain price

Vol 7, PW 5 (21 May 03) Exploration & Production

ONGC HAS ordered 25 onland rigs from Romania and is privately congratulating itself that it is doing so after an open tender and not by nominating sister company state-owned Bharat Heavy Electricals, as many would have expected.

Desperate to replace an equal number of 30-year old antiquated Russian rigs, ONGC issued a small tender for five rigs last October to test the market. Ten companies bought tender documents but only six qualified.

When the price bids were opened, ONGC got a pleasant surprise. Upet S.

A, an established oilfield equipment manufacturer in Romania, with a 130-year track record, quoted an unbeatable price of just Rs6cr for each 50-tonne workover rig and Rs7.5cr for each 100-tonne work over rig. None of the other companies came anywhere near.

Not even BHEL, which came fifth with a price quote of Rs15cr per rig! For ONGC it was an open and shut case. But because it had a MoU with BHEL, ONGC was obliged to ask it if it could match Upet's price.

Unsurprisingly, it couldn't. "We told BHEL of the L1 bidder's prices and asked them to match it," says an ONGC source.

"They could not give us a clear answer and finally backed out. We couldn't wait indefinitely because the rigs are needed urgently." Bargain prices in hand, ONGC immediately placed an order for twenty additional rigs from Upet, without issuing a fresh tender.

More, it negotiated a massive discount for the 25 rigs! As with most ONGC tenders, the rumour mills started churning out gossip that Upet could only quote such low prices because Romania is a sub-standard producer. ONGC disagrees.

"Romanian rigs were among the first rigs with us when we started drilling for oil in the 1960s." On 13th May, ONGC sent a two-member team to visit Upet's manufacturing facilities in Romania.