Rock-bottom price bids for two â€کnew-build' jack-ups

Vol 11, PW 5 (12 Jul 07) Exploration & Production

ONGC will have been overjoyed at price bids it received for two â€کnew build’ jack-ups for five years each when bids were opened in Mumbai on June 28th.

To the shock of drillers - and to ONGC’s pleasant surprise - newcomer Great Offshore emerged the lowest bidder, quoting a day rate of $139,919. Second was Jindal Drilling offering a rig at $143,788 per day, followed by Mercator Offshore, quoting $144,400.

Fourth was Jindal at $148,603 a day, while Aban Loyd came last, quoting $174,141. Going by the original dates of the tender, the validity of the bids was to expire on July 3rd but before opening the price bids ONGC asked bidders to agree to extend the validity till July 17th.

Drillers say they’ve not received any communication from ONGC after the price bids were opened. “ONGC usually gets active just two or three days before the validity of the bids expires,â€‌ says a driller, “and normally asks the second ranked bidder to match the rates of the lowest bidder.

â€‌ This is generally a long-drawn out process involving much haggling. “ONGC has not yet begun any negotiations,â€‌ says a source.

Drillers say the rates quoted in the tender, “are well below market ratesâ€‌. Charter hire rates for â€کnew-build’ jack-ups, we hear, are around $200,00 per day.

“This is for one or two year contracts but the rate comes down by about $15,000 or $20,000 for a five-year contract,â€‌ says a source. “Great Offshore’s rate came as a total surprise.

â€‌ Great Offshore never figured in the calculations of drillers as being even close to the winning line. “The prices show desperation from Indian companies with rigs on order but no drilling experience,â€‌ says one driller.

“These are not market rates at all.â€‌ These new companies, we are told, “will not get orders outside India and (so) want to first gain experience in the domestic market before venturing overseas.