Hopes dwindle for ONGC contract with Sevan Driller-II

Vol 13, PW 5 (13 Aug 09) Exploration & Production

ONGC has turned down a request from Norwegian driller Sevan Marine to extend the mobilisation date of its under-construction new-build deepwater rig Sevan Driller-II to beyond December 2010.

Instead ONGC insists the rig must be mobilised by December 2010, failing which it will take legal opinion before invoking a $15m performance bank guarantee deposited by Sevan in June 2008. PETROWATCH learns that during a meeting on August 7 the powerful Executive Purchase Committee (EPC) at ONGC also decided to send a notice to Sevan giving the driller a 10-day deadline in which to justify why the contract should not be terminated.

ONGC acted, we hear, after receiving a monthly progress report from Sevan on May 8, which listed, among other things, the following: آ· Sevan’s decision to postpone spending on the rig’s construction due to lack of funding آ· Planned construction start date of February 17, 2009 was subject to ONGC acceptance of the revised mobilisation schedule آ· Inability by Sevan to move ahead without an official response from ONGC and lack of funding آ· Steel cutting began on October 10, 2008 and the main hull drawings are prepared but overall progress is zero and slippage on start of construction will impact delivery date ONGC had issued a firm order to hire Sevan Driller-II for three years from December 2010 on June 13, 2008 at a day rate of $524,900. In October the same year ONGC sent a draft contract but Sevan did not sign it and wrote back on December 12 and January 20 asking for the mobilisation date to be extended to December 2011.

More, Sevan asked ONGC not to levy liquidated damages and for the contract to be extended to five years from the original three. Dumbfounded, ONGC sat on both letters and in January this year invited EoIs for three categories of deepwater rigs.

“Our idea was that at no point of time should there be more than three deepwater rigs in a year with ONGC,â€‌ we are told. Sevan again wrote to ONGC on June 6 this year saying it is willing to accept a three-year contract after all, but that the mobilisation period should be extended to September 30, 2011.

Sevan Driller-II should be ready by July 2011.