Great Offshore might lose â€کjack-up' deal with ONGC

Vol 12, PW 24 (07 May 09) Exploration & Production

Great Offshore seems to be on course to lose a five-year contract with ONGC for its â€کnew-build’ jack-up Samed Shikhar because the rig will not be mobilised by the date marked in the Letter of Intent (LoI).

Samed Shikhar is under construction at the Bharati Shipyard near Dabhol, south of Mumbai, and contracted to be mobilised for ONGC by May 14. But industry sources tell PETROWATCH construction is far behind schedule.

We understand Great Offshore had earlier told ONGC the rig could be delivered on November 30, 2008 - at the earliest. In a detailed schedule for ONGC - seen by PETROWATCH - Great Offshore had said construction would be finished between November 2008 and January 2009, and the rig inspected from February to April.

Following this, it would be towed to India from May 1 and reach the ONGC location by May 14. But we now understand ONGC has in hand a report from rig inspection agency Moduspec which, after inspecting construction activity at the yard, has concluded that Samed Shikhar will not be delivered before October 8, 2010 – far beyond the April 30, 2009 outer date set by Great Offshore.

Moduspec, we learn, says several major items needed for the rig are yet to be delivered to the shipyard and concluded that the rig would not be delivered before October 8, 2010 after comparing the performance of Bharati Shipyard with other jack-up construction yards in Singapore over the past six years. What are ONGC’s options Well, the contract clearly states that if the rig is not mobilised on or before May 14, the agreement between ONGC and Great Offshore is terminated automatically and the driller’s performance bank guarantee is forfeited as a penalty.

In addition, Great Offshore will be barred from participating in ONGC rig hire tenders for two years from the date of termination. ONGC also has the right to immediately begin work to hire a substitute jack-up.

Will Great Offshore request ONGC to extend the mobilisation period So far it hasn’t.