ONGC rejects Transocean services offer for DD-KG1

Vol 13, PW 3 (16 Jul 09) Exploration & Production

Transocean has failed to win the services contract for its deepwater drilling rig Dhirubhai Deepwater KG1 on loan to ONGC from Reliance, which is set to drill its first well in the Kerala Konkan Basin on India’s west coast.

Instead, the $350m contract has gone to rival Schlumberger, which beat Halliburton and Baker Hughes for the job. ONGC received an unsolicited offer from Transocean on May 27 making a strong pitch on behalf of its fully owned drilling services subsidiary Applied Drilling Technology International (ADTI).

Transocean accused ONGC of short-listing Schlumberger, Baker Hughes and Halliburton for the services tender, “on very restrictive pre-qualification criteriaâ€‌ and by so restricting competition, “ONGC would be missing the opportunity to benefit from cost effective solutions offered by Transocean and ADTI.â€‌ ONGC, however, was unconvinced and riposted that ADTI has deepwater experience of just one well in water depths up to 1080 metres while the minimum required ranged from one to three years in 1800 metres water depth.

Further, ONGC said its Bid Evaluation Criteria for the services tender clearly states that bidders, their sub-contractors and consortium partners should not be either an affiliate or subsidiary or parent or part of the group company of the drilling contractor or DD-KG1 provider. “This particular clause was inserted to avoid conflicts of interests,â€‌ stresses an ONGC source.

More, ONGC points to guidelines from the anti-corruption Central Vigilance Commission watchdog saying a firm hired by a state company, “to provide goods or works for a project and any of its affiliates will be disqualified from providing consulting service for the same project.â€‌ Also, “a firm hired to provide consulting services for the preparation or implementation of a project, and any of its affiliates, will be disqualified from providing goods or services or works or services related to the initial assignment for the same project.

â€‌ Backed by such strong guidelines, ONGC said Transocean’s offer, “did not merit further considerationâ€‌ and ought to be rejected.

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