Enthusiastic response to ONGC tender for two jack-ups

Vol 10, PW 26 (03 May 07) Exploration & Production

Drilling contractors have responded enthusiastically to an ONGC tender for a five-year contract for two newly built jack-up rigs that can drill in up to 300-feet water depths.

PETROWATCH learns that nine companies submitted bids for 17 rigs by the 3rd April deadline: Essar Oil in collaboration with sister company Essar Oilfield Services is offering two rigs (Y-308 and Y-309) that it will build at the ABG Shipyard at Dahej; Jagson International is offering Jagson Fortune; Aban Offshore is offering Deep Driller-7 and Aban VIII; Greatship India is offering three rigs; Great Eastern Shipping is offering one rig; Unitrade Gesellschaft India is offering Japanese rig Hakaryu X; Jindal Drilling is offering two rigs; KCA Deutag Drilling is offering Thule Energy and Thule Force; and Mercator Oil and Gas is offering three rigs. What day rates have they quoted One bidder tells us the last time ONGC issued a tender for this type of rig rates were around $140,000 per day.

Another (independent) observer tells us the present rate for rigs of this kind is between $180,000-$210,000 per day – down from earlier highs of $225,000 per day. “Prices are coming down because of an intensive â€کnew build’ programme over the last year,â€‌ we hear.

“By the time ONGC deploys these rigs the shortage will be over because of the new supply coming into the market over the next two years.â€‌ ONGC wants to deploy the two rigs by 14th May 2009.

“Sixty-seven jack ups are under construction the world over as we speak,â€‌ we learn. “And that doesn’t include the 10-12 new jack-ups that came to market last year.

â€‌ Contractor enthusiasm for the ONGC tender is explained by the long duration of the contract. “There are not many contracts of this length in the market,â€‌ we learn.

“Most contractors will be very happy to sign a deal for five years and won’t want to scare off the operator by quoting too high.â€‌ Will ONGC try to squeeze contractors to go below $180,000 per day “They will certainly try!â€‌ we hear.

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