Expect high rig rates for ONGC's new-build tender

Vol 12, PW 5 (24 Jul 08) Exploration & Production

ONGC should expect to pay higher charter hire rates for its ongoing â€کnew-build’ jack-up tender because of its sudden decision to hire just one and not two rigs as originally announced.

Bidders have until July 29 to submit offers for one â€کnew-build’ jack-up that can drill in water depths between 300 and 350 feet, with a 10,000-psi BOP (Blow out Preventer) Stack for mobilisation by December 31, 2009 for five years. One likely bidder tells us ONGC’s decision to slash its requirement to one rig, “came as an unpleasant surpriseâ€‌.

The loser in this, we are told, will be ONGC, as hire rates will go up. “ONGC could have got each rig for around $145,000/day if it wanted two rigs,â€‌ he says, “but now the rates will go up to around $155,000/day.

â€‌ He adds: “ONGC should remember there’s no shortage of (drilling) jobs in other parts of the world.â€‌ ONGC’s June 28 â€کclarifications’ to bidders did not say why only one rig is needed and industry sources see a sinister plot hatched in league with companies owning old rigs already on contract to ONGC.

“Many of these rigs are just pieces of junk and their contracts are up for renewal,â€‌ we are told. “These drillers are worried they may not get re-hired if ONGC goes all out for new builds.

â€‌ Whether it is a â€کnew-build’ or an old jack-up, the rates are the same in the market, say prospective bidders. “It makes more sense for ONGC to hire a â€کnew-build’ than the junk rigs it has now in Indian waters.

â€‌ Mercator and Greatship are the two Indian drillers most likely to win, followed by foreign drillers Atlantic, Mosvold and Seawolf, and Scorpion. One Seawolf rig is expected to be ready by December 2008 and the other by February 2009.

The Mercator â€کnew-build’ is expected by March 2009 and the Greatship new build by October 2009, followed by the Atlantic â€کnew-build’ in November 2009 and the Mosvold â€کnew-build’ the next month.