Statoil must wait longer for decision on West Navion

Vol 6, PW 18 (06 Nov 02) Exploration & Production
     

STATOIL OF NORWAY will have to wait longer before its West Navion deepwater rig starts drilling for ONGC.

This despite some impressive lobbying on its behalf by former Madhya Pradesh chief minister Shyam Charan Shukla to ensure it gets the job fast! We learn the subject was discussed at length during a 26th October ONGC board meeting. However, the board deferred a decision until ONGC receives bids for rigs to launch its ambitious deepwater drilling programme.

"Once these rates come in," reveals a source, "we will be able to compare them with those for West Navion to see if we are getting a competitive deal." In the weeks ahead ONGC plans to float global tenders for rigs to drill in water depths between 1,000 metres and 1,500 metres. Yet ONGC has already earmarked West Navion to drill in depths of between 1,500 metres to 2,500 metres.

We understand Statoil has agreed to an 'effective day rate' of $205,000 for the rig. "They were insisting on $220,000 and walked out when we quoted $205,000," adds our source.

"But they later returned to the talks and agreed to our figure." Statoil will need to work hard to close the deal, despite the intense lobbying by Shukla. Concerns are being raised about several aspects of the deal, in particular over ownership of West Navion.

Private company Smedvig is believed to be part owner of the rig with Statoil and the concern centres on the legal structure of the rig's ownership. Another issue is Statoil's condition that it will buy the drilling materials and 'consumables' as this defies ONGC's operating procedure.

There's also discomfort over Statoil's insistence that any disputes should be decided in The Netherlands but under British law.

LNG Summit