Impossible ONGC terms anger deepwater contractors

Vol 10, PW 26 (03 May 07) People & Policy

ONGC is running the risk of attracting little or no competition in its tender to hire a deepwater rig for three years.

This is the emerging picture from a pre-bid meeting on 30th April in Mumbai for a rig to replace Belford Dolphin, which has completed her contract. Only nine companies turned up, even though 17 tender documents (one for each rig offered) were sold.

Of these nine companies only five are drilling contractors: Aban Loyd, Mercator Offshore, Frigstaad, Great Ship and Transocean; the rest are service providers or would-be drilling contractors: Schlumberger, Baker Hughes, Baker Atlas and Halliburton. ONGC wants the rig mobilised “as of yesterdayâ€‌ but everyone at the pre-bid ruled this out.

“ONGC was told that very few rigs are available,â€‌ says one source that attended. “The earliest is either third quarter or fourth quarter of 2009.

â€‌ Says another driller: “ONGC is not helping itself with the kind of terms in the tender.â€‌ Onerous tender terms could actually scare most drillers away.

Why One, for the first time ever, ONGC wants the driller to provide a jetty for the rig. “Why should we provide a jettyâ€‌ asks a driller.

“No drilling company puts up jetties, only operators do.â€‌ He adds: “ONGC seems to have learnt the wrong things from having two deepwater rigs on hire.

â€‌ This driller believes ONGC’s attitude is “to load everything possible on the driller and not soil its own hands.â€‌ Another concern is a condition that the bidder should have deepwater experience.

“Everybody has opposed this,â€‌ we hear from another source. “The sensible condition is to insist that those operating the rig have deepwater experience.

â€‌ There’s also surprise over ONGC’s insistence that the driller should provide associated services like helicopters, supply boats and logging. “ONGC has six rig years of deepwater experience, and should hire these services on its own,â€‌ we here.

“Usually, the learning curve is completed within a year.â€‌ More, “service providers will fight hard to get a direct ONGC contract and will give cheaper rates.

â€‌ If ONGC directly hires services, “the risk to the driller is mitigated. Our strength is not provision of services.