Reliance $564,603/day Transocean rig offer to ONGC

Vol 12, PW 22 (09 Apr 09) Exploration & Production

Losing opportunities has become an ONGC hallmark, especially in hiring deepwater drilling rigs! Sadly, this reputation is unlikely to change with news that ONGC directors on April 2 â€کdeferred’ a decision to issue Reliance with a Letter of Intent to hire Transocean â€کnew build’ Dhirubhai Deepwater KG1 - contracted for a â€کfirm’ five years, but which Reliance no longer needs right away when the rig will be ready in July.

Had ONGC gone ahead, it would have signed a tripartite deal with Transocean and Reliance to hire the rig for an initial period of 18 months, followed by a six-month extension. PETROWATCH learns Reliance offered Dhirubhai Deepwater KG1 to ONGC at an Operating Day Rate (ODR) of $495,000 for the first six months and $510,000/day for the remaining period of the contract.

In addition, Reliance asked for â€کhandling’ charges of $12,000/day and another $50,000/day extra as hiring charges for tools and equipment. ONGC negotiators, we learn, protested at the â€کhigh’ handling charges of $12,000/day but Reliance refused to budge, leaving ONGC no choice but to accept.

Added up, these work out to an average ODR of $564,603/day. An industry source tells us that at this rate, Dhirubhai Deepwater KG1 would have been a “good dealâ€‌ as it compares well with two other rigs hired by ONGC to drill in 10,000 and 7500-ft water depths: Sevan Driller-II and Platinum Explorer.

Sevan Driller-II was hired in June 2008 for three years at an ODR of $524,900, while Platinum Explorer was hired in December 2008 for five years at an ODR of $585,000. On the face of it, Dhirubhai Deepwater KG1’s rate is 7.55% higher than Sevan Driller-II but cheaper by 3.5% to Platinum Explorer.

But it’s not clear if Sevan Driller-II can mobilise by December 2010, as ONGC wants.