Reliance makes surprise Transocean rig offer to ONGC

Vol 12, PW 21 (26 Mar 09) Exploration & Production

Even the mighty Reliance is not exempt from the global credit squeeze.

How else to explain a decision to put deepwater exploration on hold with its offer of three Transocean new builds, plus a rig already operating, to ONGC for a total five â€کrig years’ Shrouded in secrecy, PETROWATCH learns Reliance’s surprise offer to its state-owned rival comes as ONGC evaluates separate offers from drilling contractors received on January 30 to its EoI (Expression of Interest) invitation issued on January 13. ONGC’s EoI asks for three ultra deepwater rigs and one deepwater rig that can operate in water depths from 600 to 4000 metres – exactly what Reliance is offering.

True to style, Reliance didn’t bother turning up for ONGC’s pre-bid with drillers on February 6 (attended by 13 contractors), hoping instead to clinch a deal through the back door. Reliance and ONGC, report sources, held their first meeting on January 5, after which Reliance made a â€کpreliminary offer’ on January 20.

Two more meetings took place on February 2 and 16, with another, more detailed offer on February 17. In the latest letter Reliance said it, “can offer up to five â€کrig years’ from 10,000-ft ultra deepwater rigsâ€‌ from a choice of the following four: Dhirubhai Deepwater KG1 (Under construction) Dhirubhai Deepwater KG2 (Under construction) Discoverer India (Under construction) Deepwater Frontier (Operational) Transocean is building the first three at Samsung’s shipyard in South Korea and has been awarded â€کfirm’ five-year contracts by Reliance.

For Discoverer India, adds Reliance, there is an option to extend the contract with Transocean by another two or five years. Alone among the four is Deepwater Frontier – drilling for Reliance in the eastern offshore, under contract till August 2011, with an option to extend.

Describing its proposal as a “deepwater rig sharing opportunityâ€‌, Reliance says it is ready to offer ONGC, “Five â€کrig years’ through two rigs or a maximum three.â€‌ Reliance also said that Dhirubhai Deepwater KG1 should be available in the third quarter of next year; Dhirubhai Deepwater KG2 in the first quarter of next year and Discoverer India between December 2010 and March 2011.

Reliance has reserved the right to choose which rig(s) it offers but promises to tell ONGC “at least six monthsâ€‌ in advance of its decision.