November 16 deadline for ONGC to hire Eirik Raude

Vol 11, PW 15 (15 Nov 07) Exploration & Production

ONGC has time till tomorrow (Friday, November 16) to make up its mind over hiring Ocean Rig’s drillship Eirik Raude for its deepwater drilling programme.

Ocean Rig set this new and final deadline after ONGC asked for an extension when the previous deadline of November 7 was about to expire. If there’s no word from ONGC by tomorrow, we hear, Ocean Rig will hire out the rig to Petrobras who wants Eirik Raude for four years.

ONGC is offering a five-year contract for Eirik Raude. An industry source tells this report that a special ONGC board meeting over this issue on Wednesday, November 14, turned out to be inconclusive.

A top ONGC source tells us that, “the situation (about hiring Eirik Raude) is still very fluid. Price is the main issue.

â€‌ Another senior ONGC source says: “We are still discussing the matter in detail as we want to go for the best option.â€‌ Asked about Ocean Rig’s new deadline, he replied: “I don’t remember the exact date but there must be some deadline as the rig market is very tight.

â€‌ Adds this source: “Eirik Raude is the only rig of its kind available to us the earliest.â€‌ One of the issues over which there’s no agreement yet, says another source, is about how the mobilisation fee of $60m should be paid.

“Normally the mob fee is paid when a rig arrives on location but Ocean Rig wants some amount in advance since the rig move itself will take about three months.â€‌ We hear that matters became complicated when Transocean sent in an unsolicited bid to ONGC, soon after Ocean Rig’s rate for Eirik Raude was publicised by an Indian oil and gas website.

“Transocean have been running around a lot to various ONGC officials, offering them fancy (rig) mobilisation scenarios, but the earliest they can mobilise is late 2009, one year after Eirik Raude.â€‌ A senior ONGC source said the Transocean offer is not the hurdle.

“They (Transocean) have responded to our Expression of Interest but that is not coming in the way.â€‌