ONGC asks Ocean Rig for better rate for Eirik Raude

Vol 11, PW 11 (04 Oct 07) Exploration & Production

ONGC is unwilling to pay $570,000 per day for semi-submersible Eirik Raude, owned by Norway’s Ocean Rig.

ONGC has asked Ocean Rig to return with a revised offer in a week. “Both ONGC and Ocean Rig were to decide by September 30, but now it could be by the end of this week or early next week,â€‌ says a driller.

“If ONGC accepts Ocean Rig’s rate, it will be the highest day rate in the world. ONGC doesn’t want to set this kind of a record, especially when the contract is being awarded through negotiation and not tender.

â€‌ The highest day rate, so far, for a rig is $530,000. “ONGC doesn’t want to pay anything more than that.

â€‌ Ocean Rig, meanwhile, is “very unhappy and upsetâ€‌ that verbatim reports of its negotiations with ONGC have appeared on an Indian oil and gas website. “Newspapers in Norway have picked up these reports,â€‌ we hear.

“Ocean Rig is listed on the stock exchange and could be suspected of leaking this information to hype its share price.â€‌ Drilling contractors, meanwhile, feel ONGC is just wasting time in a separate ongoing tender to hire a deepwater rig than can drill in water depths up to 12,000-ft.

A second pre-bid meeting was held in Mumbai on September 21, attended by all the drillers who took part in the first pre-bid meeting on April 30. Says a source: “The same issues that were raised on April 30 were raised this time also.

â€‌ One is ONGC’s insistence for a contract that includes the rig plus all associated services necessary for the assignment, a so-called â€کintegrated’ contract. The second concerns ONGC’s condition that the driller should take on the responsibility of arranging a jetty for the drillship.

Drillers wanted to know if ONGC would accept a rig-only contract. “There was no definite answer from ONGC,â€‌ says a source.

“We feel ONGC is just going through the motions until it has a clear idea about its current talks with Ocean Rig. Nothing much came out of the (September 21) meeting.