Kedarnath contract under ONGC scanner

Vol 14, PW 11 (18 Nov 10) Exploration & Production

Missing since October - one jack-up answering to the name of Kedarnath - when found, please return to ONGC.

PETROWATCH learns Great Offshore owned 300-ft ‘slot’ type jack-up Kedarnath has failed to meet its ONGC mobilisation deadline and could lose its five-year contract. ONGC ‘rehired’ Kedarnath last December (2009) at an Effective Day Rate (EDR) of $60,300 with a mandate to mobilise by October 15 this year.

But on October 19, Great Offshore wrote to ONGC asking for a one-month mobilisation extension. When contacted, three senior Great Offshore executives had no idea about its present location, or when it will be mobilised.

ONGC’s powerful Executive Purchase Committee (EPC) met on November 10 and November 11 and debated whether to terminate Kedarnath’s contract and punish Great Offshore for the transgression. “Great Offshore should have mobilised the rig by November 10,” says ONGC.

“But the EPC has yet to take a decision. This will be discussed again at the next (EPC) meeting.

” No date has been fixed for the next meeting, but hopefully ONGC director technical UN Bose and ONGC’s chief of drilling services MD Joshi will be in attendance. Their absence explains the lack of a decision at the last meeting.

Great Offshore can expect to pay ‘liquidated damages’ equivalent to a maximum 5% of the contract’s value, or $110,000. But Great Offshore should brace itself for a shock.

“ONGC’s ‘working group’,” we hear “is suggesting Kedarnath’s rate should be renegotiated, as it is too high.” Great Offshore originally quoted an Operating Day Rate (ODR) of $89,460 when it bid last October (2009).

ONGC knocked that down to an EDR of $60,300. And on November 12, we hear, Great Offshore wrote to ONGC offering a further $1000 reduction in the day rate, bringing it down to an EDR of $59,300.

Is Kedarnath about to re-appear