ONGC board refuses to discuss deepwater tender

Vol 7, PW 10 (30 Jul 03) Exploration & Production

MYSTERIOUS IS the only way to describe ONGC's decision-making process in the selection of a deepwater drilling contractor.

We understand the corporation's all-powerful 'Executive Purchase Committee' shied away from taking a decision to formally award the contracts to Transocean Sedco Forex and Dolphin Drilling even though it opened price bids on 19th July. Why Fear of getting it wrong! We understand the EPC wanted the company's full board of directors - which includes government nominees - to first endorse its selection of drilling contractors.

On 26th July, the matter was listed on the agenda of ONGC's full board meeting in Delhi but PETROWATCH learns the full board refused to play ball and returned the file to the EPC with the curt message that under ONGC's delegation of powers the full board has no 'approval' role in this matter. "The delegation of powers in ONGC is very clear," we are told.

"The levels of approval for tenders of varying magnitude are also clearly laid down. The top management has full powers to take decision even in the biggest tender.

It is surprising that the EPC wants to involve the board in this tender and that too at the final stage." If the board had gone along with the EPC, adds an industry source, "a very peculiar situation" would have arisen. "It would have meant either that the board of directors has no confidence in the EPC's decision-making capability or that the board has been made to approve something fishy." Either way, we are told, "it would have been a poor reflection" on ONGC's senior management.

"What was so special in this tender that the board should get involved" he adds. Latest information with PETROWATCH suggests all the paperwork for the tender is back with the EPC, which is expected to issue 'Letters of Intent' any day to Transocean and Dolphin.

From Transocean, ONGC has selected the Deepwater Seven Seas rig from among the company's several subsidiaries that competed with each other in the 1,800-metre water depth category. We learn ONGC has negotiated down Transocean's price to about $160,000 from the $168,000 per day it first quoted.

In the more prestigious 3,000-metre category, Transocean's rates were no match for Dolphin Drilling, which first quoted $192,200 a day for the dual-function Belford Dolphin but has now agreed to hire the rig to ONGC for $191,700. By contrast, Transocean's lowest rate for the three rigs it offered in this category was $236,000 for the Deepwater Millennium.