Drilling contractors protest new ONGC rig hire terms

Vol 10, PW 14 (02 Nov 06) Exploration & Production

Drilling contractors are unhappy at the inclusion of new terms in the bid documents for ONGCs tender to charter hire two new rigs.

Resentment surfaced during the 6th October pre-bid meeting organised by ONGC in Mumbai. Contractors are angry that ONGC is trying to make them responsible for two scenarios after drilling begins.

The first is if it takes more than 48 hours to retrieve a rigs legs when moving from one drilling location to another. The second is in situations where the underground formation is damaged during drilling.

Under the proposed new terms, ONGC wants to pay zero daily hire charges to a driller from the third day onwards if the legs cannot be retrieved before that. Says a contractor: You wont find this condition in any contract anywhere in the world.

ONGC, we are told, is generalising from its unfortunate experience with Transocean jack-up Nordic Explorer whose legs got stuck for about a month at a location in the West Bengal offshore. During this period ONGC was forced to pay the applicable daily hire charges for Nordic Explorer.

Why is ONGC holding all drillers responsible for this asks a contractor. Present practice worldwide is to pay the rates that are applicable in such situations and not to put the contractor on a zero rate.

Anger also centres on ONGCs proposal to hold drillers responsible for damage to the reservoir while drilling. This is the first time anybody in the world is saying that drillers should be responsible for damage to the reservoir, says a source.

This is the responsibility of the operator. You cannot blame it on the negligence of the driller if your formation gets damaged.

Drillers say they provide only the rig; the operator puts in the downhole equipment. World over the integrity of the underground formations is the responsibility of the operator, we are told.

This is clearly set out in the draft contract of the International Association of Drilling contractors.

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