Twelve rigs in race for three ONGC jack-up contracts

Vol 13, PW 8 (24 Sep 09) Exploration & Production

Jack-up hire rates are softening, thanks to a surplus of rigs on the market, according to drilling contractors.

PETROWATCH learns ONGC plans to take full advantage of this in a tender underway to re-hire three jack-ups to drill in the Mumbai offshore for which it has received offers for 12 rigs. “We expected this tender would get a good response but didn’t anticipate that quite so many rigs would be offered!â€‌ says one driller, participating in the tender.

“This shows that jack-ups are chasing contracts, not the other way round.â€‌ Technical bids were opened in Mumbai on September 7 for the tender to re-hire rigs Noble Ed Holt (currently working at $104,000/day), Pride Pennsylvania ($115,000/day), and Kedarnath ($47,000/day), whose three-year contracts with ONGC are coming to an end shortly.

“Rig hire rates are down by about 25% from a year ago and ONGC could get fresh contracts at about $80,000/day for each rig,â€‌ adds a driller. ONGC wanted two customs duty paid rigs (Category-I) and one non-customs duty paid rig (Category-II).

But for Category-I, ONGC has received nine offers while for Category-II it has received three offers! Rigs competing for Category-I are: Pride Pennsylvania, Noble Ed Holt, Noble Charlie Yester, Trident-II, JT Angel, Adriatic-XI, Ensco 50, Perro Negro 3 and Foresight Driller VII. Those competing for Category-II are: Trident-XII, Perro Negro 2 and Kedarnath.

ONGC is offering five-year contracts for the selected rigs. Some say Kedarnath, owned by Indian company Great Offshore, is expected to easily win the Category-II contract because, “it is already working at a very low rate and being an Indian-owned rig it will get a 10% price preference over its two foreign-owned competitors in that category.

â€‌ ONGC wants the selected rigs to be mobilized before the start of the 2010 monsoon season.