Collapse in Eirik Raude talks force tender re-think

Vol 11, PW 15 (29 Nov 07) Exploration & Production

ONGC is preparing two separate tenders for deepwater rigs following the collapse of talks with Ocean Rig for drillship Eirik Raude.

No formal announcement has yet been made, but industry sources tell us the first tender, which ONGC wants to â€کfast-track’ following its aborted talks with Ocean Rig, will be for a floater that can drill in 10,000-ft water depths, available from now till June 2010. The second tender, to be announced later, will be for a rig that can drill in 7500-ft water depths.

“ONGC wants to introduce â€کbonus’ and â€کpenalty’ clauses of $100 a day,â€‌ reveals a source. “The earlier the rig is available, the more money the contractor will get.

The later the rig is available, the less money he will get.â€‌ ONGC’s proposed formula will work something like this: if a contractor offers $500,000/day and can deliver two months (60 days) earlier than the cut–off date of, say, June 30, 2010, i.

e. by April, he will be offered a â€کbonus’ of $6000/day (60 x $100) on top of his offer of $500,000/day, bringing it up to $506,000/day.

If, however, the contractor can only mobilise 60 days after the cut off date he will suffer a â€کpenalty’ of $6000/day, bringing the day rate down to $493,000/day. “Very interesting,â€‌ says one contractor.

“But ONGC is not setting the rates. Contractors are setting the rates.

â€‌ Unlike ONGC’s last tender, for which a pre-bid was held on September 21, ONGC is likely to offer contractors the option of bidding a â€کrig-only’ package or â€کintegrated services’ package. “ONGC is likely to make an announcement within the next 30 days,â€‌ says another contractor.

“Following that there will be another 30 days in which to submit bids.â€‌ Contacted by PETROWATCH, ONGC tells us coyly: “We have not decided on the next stage in the deepwater tender.

For now it is the status quo.â€‌