Around 70 per cent of India’s domestic drilling industry could be in peril due to the lack of differentiation between old junk rigs and new high spec jack-ups in ONGC’s tender, reports Business Standard (BS).
Oil and Natural Gas Corporation (ONGC), a Navratna PSU, is the largest oil and gas exploration and production company. It is also the biggest client of Indian drilling companies and pays nearly 95 per cent of the industry’s revenues.
As per the report published on Friday by Sawrajyaa senior executive with Jindal Drilling told BS: “We (the domestic drilling firms) are forced to compete with old rigs in the tender and are not offered any premium despite our rigs being technologically improved and safety enhanced.”
Commenting on the potential losses that the firms would incur due to this act of omission by ONGC, a bidder in the auction said, “an investment of about $200 million has been made per jack-up rig by the Indian contractors. After this huge investment, we understand that rigs are going to be idle since ONGC has chosen to not differentiate.”
“The new generation rig bidder can barely get its operational cost since it has to compete with the old junk rig,” said another bidder.
Earlier, it was reported in October 2017 that ONGC was planning to purchase 27 new oil rigs to replace around half of its old ones and the deal was estimated to cost Rs 3,000 crore to Rs 3,500 crore.
It may be mentioned that ONGC has missed its oil production target for ASSAM in 2017-18. It had set a target to produce 5.9 m barrels or 16,200 b/d over the fiscal but has produced only about 5.7m barrels or 15,700 b/d.
However, ONGC is trying to achieve its ‘Mission 2600’ that aims to raise Assam asset production to 2600 t/d or 18,600 b/d.