Sevan offers ONGC 'standby' Maersk rig

Vol 13, PW 22 (22 Apr 10) Exploration & Production

Sevan Drilling is offering ONGC a standby rig to make up for any delay in mobilising its ‘new-build’ Sevan Driller-II - under construction in China.

The Norwegian driller must be desperately hoping ONGC accepts because if it doesn’t and Sevan Driller-II fails to mobilise offshore India by December 31 this year as set out in the June 13, 2008 LoI, then ONGC could choose to cash Sevan’s $15.9m mobilisation bank guarantee. PETROWATCH learns a Sevan Drilling team led by CEO Stein Gilharjus travelled to India late March to meet senior ONGC executives amid growing fears Sevan Driller-II will miss its mobilisation deadline.

Until recently, Sevan has been facing a severe shortage of funds triggered by the global recession. According to an industry source, the Sevan team offered ONGC a standby rig from Denmark’s Maersk Drilling: Maersk Deepwater Semi-submersible No.

3 - under construction in Singapore’s Keppel FELS shipyard. In a letter to ONGC last week, Sevan said the Maersk rig could be delivered by the Singapore yard on August 1 for mobilisation offshore India this September.

Maersk’s rig exceeds the tender specifications set by ONGC when it hired Sevan Driller-II on a three-year contract at $524,900/day to drill in 10,000 feet water depths. “ONGC has the proposal but hasn’t committed to anything,” we hear.

“Sevan is also sweetening the offer by foregoing the $100/day early delivery bonus for bringing in the Maersk rig before December.” ONGC hasn’t yet signed a contract for Sevan Driller-II even though it issued the LoI almost two years ago.

Some say this is unimportant, as the LoI is as good as a formal contract. But others say Sevan won’t sign the contract, as it is unhappy that ONGC unilaterally changed an agreed arbitration clause.

“This is unacceptable,” we hear.