Transocean accuses ONGC of rig tender bias

Vol 14, PW 3 (29 Jul 10) Exploration & Production

Transocean is accusing ONGC of bias in its tender to hire a semi-submersible for three years, beginning December.

ONGC is yet to officially announce the winner but, as reported in our last issue, it is likely to award the LoI to Essar Oilfield for Essar Wildcat. Transocean was apparently so incensed after reading our July 15 story that it sent a harsh three page letter on July 20 to ex-bureaucrat VK Shunglu, ONGC’s ‘independent external monitor’ for this tender, with a copy marked to ONGC director technology and field services UN Bose.

When ONGC opened price bids on July 9, both Essar and Transocean were tantalisingly close: Transocean’s Global Santa Fe-135 was offered at an Effective Day Rate of $249,911 while Essar Wildcat was offered at $249,997. At first, Transocean’s price looks cheaper.

But Essar offered to use just 11,000 litres/day of diesel to operate its rig; Transocean quoted 20,000 litres/day. Diesel is a ‘pass-on’ cost, paid by the contractor, in this case ONGC.

After examining the two bids in greater detail ONGC determined on July 13 that Essar’s offer was cheaper by $170/day, going by July’s diesel prices. Transocean strongly objected to this decision in its letter to Shunglu, saying it used diesel prices from June, adding that it is the lowest bidder and that ONGC was wrong to “re-evaluate” the quotes.

“Transocean either believes it has a solid case,” says an observer, “or its local bosses are doing this to convince its (US-based) top management that they’ve done their best. Or it’s just being foolhardy! ONGC won’t take kindly to these allegations.

They’ve done nothing wrong.” Some believe Transocean should accept its loss gracefully.

“Transocean is a big contractor,” we hear. “One tender here and there is immaterial.

It’s bad business to antagonise an operator.” Transocean and ONGC were unavailable for comment.