Jindal wins ONGC rig tender with rock-bottom bid

Vol 13, PW 13 (03 Dec 09) Exploration & Production

Jindal Drilling has quoted a rock-bottom rate to win ONGC’s tender to rehire three jack-ups for five years.

This tender was issued to replace or re-hire Jindal-managed Noble Ed Holt, Great Offshore-owned Kedarnath, and Pride International-owned Pride Pennsylvania, all of whose three-year contracts are ending. Jindal offered Noble Ed Holt, a cantilever type jack-up that can drill in 300-feet water depths, for an effective day rate of $74,900, net of service tax – drastically lower than the $99,000/day at which it was previously working for ONGC.

Jindal’s competitors, we hear, were shocked when price bids were opened late October. “Jindal’s rate is suicidal,â€‌ says a drilling contractor.

“It has tied up its rig for five years. None of the other bidders were even willing to commit their rigs for more than two years.

â€‌ ONGC’s Executive Purchase Committee met on November 5 to review the bids and issued a Letter of Intent (LoI) to Jindal for Noble Ed Holt on November 12. “ONGC was offering a five year contract,â€‌ a Jindal source explains, “so we bid accordingly.

â€‌ ONGC needs two cantilever jack-ups and one slot or cantilever jack-up in this tender, that could in 300-feet water depths. Transocean offered Trident II for $85,862/day, net of service tax but then brought down its rate to match Noble Ed Holt during negotiations initiated by ONGC.

Transocean has also received a LoI, we hear. Other bidders for the cantilever contracts were Transocean-owned JT Angel ($90,215/day), Transocean-owned Adriatic-XI ($105,000/day) and Jindal-owned Noble Charlie Yester ($109,262/day).

Great Offshore-owned Kedarnath was the only rig offered for the slot contract. But we hear ONGC is still in negotiations with Great Offshore to reduce the $87,070 day rate quoted for Kedarnath.

This is 97.9% higher than the $44,000/day rate at which Kedarnath was previously working for ONGC! Separately, Pride International-owned Pride Pennsylvania was technically disqualified from bidding because ONGC wanted the rig mobilised pre-monsoon 2010 but it was available only post-monsoon.