All eyes on Jagson for ONGC seven-rig tender

Vol 13, PW 19 (11 Mar 10) Exploration & Production

Jagson Drilling owner Pradeep Gupta is fiercely denying industry rumours that his company has submitted an unrealistically low price bid in ONGC’s tender to replace seven jack-ups, whose contracts expire this May.

ONGC opened the technical bids on February 11 but has yet to open price bids. Delhi-based Jagson bid Ensco rigs Ensco 51 and Ensco 57 but industry sources believe the small drilling company could have undercut competition in a desperate move to win its first 300-feet jack-up contract.

But Gupta defends his company. “We are here to earn money,â€‌ he tells PETROWATCH.

“All this talk about us bidding low is untrue. We have not bid low.

We will not go against the market!â€‌ What is behind the rumours According to a competing Indian driller, Jagson has a reputation for pulling down jack-up rates and winning ONGC contracts, but not being able to deliver. “Jagson did this a few years ago with Jagson Pioneer and kept the other bidders out of that contract,â€‌ says this drilling contractor.

“You never know what Jagson will do.â€‌ He expects rates in the current ONGC tender to be between approximately $65,000 and $75,000/day.

A competing foreign driller agrees. “Jagson may have bid some stupid rate just to win the contract,â€‌ says this source, “because they’ve never before been in the 300-feet jack up category.

New small Indian companies like Jagson with just one or two rigs are sometimes desperate to win, but they often find it difficult to deliver.â€‌ It is not easy to run a rig business, he adds, especially in this poor market.

“Day rates have come down but the costs of spares and hiring staff remain the same,â€‌ we are told. “Jagson does not have a strong balance sheet like Great Offshore which can take risks by bidding low.