Vantage bids $730,000/day in ONGC deepwater tender

Vol 12, PW 12 (30 Oct 08) Exploration & Production

Houston-based Vantage Energy Services has emerged the sole valid bidder in ONGC’s March 28 tender to hire a dynamically positioned deepwater drillship that can drill in water depths of 7500 feet, on a five-year contract.

On October 20, learns PETROWATCH, only Vantage’s price bid was opened by ONGC in Mumbai. Transocean also bid by ONGC’s August 13 deadline but its bid was not opened.

“ONGC disqualified Transocean because it did not withdraw its exceptions to the proposed contract,â€‌ reports a source. Transocean objected to ONGC’s stringent contract termination clauses.

Vantage bid drillship Platinum Explorer now under construction in Daewoo’s shipyard in South Korea while Transocean bid Hull No. 2148 being constructed by Hyundai, also in South Korea.

When Vantage’s price bid was opened it was found to have quoted $730,000/day. A Vantage source tells this report that this rate includes an element of the mobilisation charges plus charges for the Remotely Operated Vehicle, cementing unit, corporate tax, personal income tax and even the escalation fees, agent’s fee and technical collaboration fee.

“In a normal international contract,â€‌ he says, “these items are not included, but ONGC wants them to be included in the rate.â€‌ But isn’t the day rate still high “Certainly not,â€‌ counters a Vantage source.

“Our rate is very competitive. If you minus all the extras that ONGC wants included, the actual rig hire rate comes to just $530,000/day.

â€‌ An industry source says the most recent high day rate notched up is by Transocean for Hull No 2148 for which Exxon has agreed to pay $675,000 hire charges only for the rig. “This deal is not yet public,â€‌ we are told.

“Transocean bid Hull No. 2148 to ONGC and to Exxon.

â€‌ However, expect ONGC to try its best and get Vantage to further reduce its quote. “It is typical of ONGC to expect a reduction in the rate,â€‌ says an observer.

If it wins, this will be Vantage’s first assignment in India.