Due to the lack of differentiation between old junk rigs and new high spec jack-ups in ONGC’s tender, around 70 per cent of India’s domestic drilling industry could be in peril, 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.
“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,” said a senior executive with Jindal Drilling to BS.
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.
It was earlier reported in October 2017 that ONGC was planning to purchase 27 new oil rigs to replace around half of its old ones. The deal was estimated to cost Rs 3,000 to 3,500 crores.
As you are no doubt aware, Swarajya is a media product that is directly dependent on support from its readers in the form of subscriptions. We do not have the muscle and backing of a large media conglomerate nor are we playing for the large advertisement sweep-stake.
Our business model is you and your subscription. And in challenging times like these, we need your support now more than ever.
We deliver over 10 - 15 high quality articles with expert insights and views. From 7AM in the morning to 10PM late night we operate to ensure you, the reader, get to see what is just right.
Becoming a Patron or a subscriber for as little as Rs 1200/year is the best way you can support our efforts.