Chinese, European firms approaches RIL for hiring rig

NEW DELHI: Reliance Industries has been approached by Chinese and European oil majors for hiring one of its drilling rigs, which had also been sought by state-run Oil and Natural Gas Corporation (ONGC).

ONGC had been talking to Reliance for past few months to hire DD-KG-1 ultra deep-sea drillship for four years at USD 5,10,000 per day, the same rate at which Reliance had taken the rigs from Transocean Inc of on five-year lease.

Though ONGC has been desperately seeking a rig to probe oil and gas leads like the ultra deepsea UD-1 discovery for past two years, the board of the company last week deferred a decision to hire the rig from Reliance on assignment basis, sources said.

On prodding from the Government and the oil regulator DGH for participating in the 'rig sharing' programme where operators share resources for optimal utilisation, Reliance had agreed to give the DD-KG-1 rig to ONGC.

But meanwhile, CNOOC of China and ENI of Italy too approached Reliance offering between USD 5,60,000 and 5,70,000 per day for the same rig.

"They (Reliance) have given us in writing that they have offers much higher than our offer price," an ONGC executive said. "The transaction on merit is very good but timing (because of ongoing elections) is bad. We have sought more time from Reliance to decide."


He said no ultra deepsea drill rig was available before end 2010 and DD-KG-1, capable of drilling 10,000 meters below seabed, will be available in July this year.

"Alternate offer (with Reliance) can't wait longer than a week," he said.

ONGC, which needs three ultra deepsea rigs, recently hired a rig from Vantage for USD 5,85,000 per day but the rig will arrive in December 2010.

Another rig it had contracted from Sevan is stuck because bankers financing the rig construction at Korean docks want comfort of a five-year contract instead of three years offered by ONGC and it will not be available before end 2011.

The third rig it had tendered for is available for a minimum USD 535,000 dayrate and is available between mid-2010 and end 2010.

"Reliance rig is our best bet," the ON executive said. Under ONGC tender conditions, the company pays USD 100 bonus if the rig operator is able to deliver the rig a day before the appointed date.

So, if Vantage is to somehow manage to deliver the rig in July this year instead of scheduled December 2010, it will earn a bonus of USD 55,000 per day, raising the dayrates to USD 6,40,000.

The executive said Reliance has so far not responded to its request for more time to decide on hiring the rig. A Reliance spokesperson could not be immediately reached for comments.