Inflexible ONGC refuses to change rig contract terms

Vol 11, PW 13 (01 Nov 07) Exploration & Production

Drilling contractors bidding for ONGC’s rig tenders are increasingly frustrated with its persistent refusal to make changes in the pre-determined contract terms, despite repeated requests in tender after tender.

Take for instance the above tender to hire two floaters. This tender was issued on August 3 and a pre-bid meeting was held in Mumbai on September 10.

One driller, for instance, wanted the mobilisation period increased from 120 days to 180 days for re-hire of rigs already working on location with ONGC. “In the present tight market of shipyard slots and equipment availability 120 days is insufficient to carry out repairs, inspections and upgrades,â€‌ we hear.

But ONGC refused to make any change. ONGC also refused separate requests from three drillers for an additional 48-hours per year as breakdown time in the contract, to be paid at the non-operating day rate.

Presently ONGC allows 32 hours per month as breakdown time. “The additional 48 hours was being allowed by ONGC till very recently,â€‌ we hear.

“But it has now been withdrawn. We think it is because of objections by auditors.

â€‌ There’s also dissatisfaction that ONGC is unwilling to reimburse 85% of the cost of the driller’s â€کdownhole’ equipment that could be lost while drilling. At present ONGC reimburses only 75%.

Drillers also unsuccessfully asked ONGC to bear the transportation and other costs to deliver replacement â€کdownhole’ equipment to the drilling rig. Another issue is over the cost of â€کkilling’ or controlling a well during a â€کblow-out’.

Presently, ONGC wants the driller to bear this cost as well as the cost of any re-drilling, fishing or reworking, up to $1m “for each incident.â€‌ Drillers want ONGC to bear all these costs.

Says a driller: “Most of these issues are there in every (rig) tender. We raise them during the pre-bid meetings but ONGC just refuses to consider them.