ONGC swamped with offers for hiring deep sea rigs, expects charter rates to come down

NEW DELHI: With the sharp cut in investments by global oil majors leaving drilling rigs with no business, state-run Oil and Natural Gas Corp ( ONGC) has been swamped with offers in a tender it floated for hiring five deep sea rigs for its KG-basin gas block campaign.

As many as 30 deep-water drillships and semi-submersible rigs have been offered by about one-and-half-dozen companies to ONGC in the tender.

"The response we have received is unprecedented. Never have been witnessed such intense competition which we hope will translate into rig rates coming down," a senior ONGC official said. National oil companies like ONGC are the only ones in the world who are going ahead with new field developments while the global majors postpone investments in view of oil prices halving to less than $50 per barrel.

"The last deep sea rig that we hired was Platinum Explorer from Vantage for $585,000 per day. We anticipate charter rates will come down to less than $300,000 a day in our tender," he said.

The trend of falling charter rates was visible last month when Reliance Industries extended lease period of Dhirubhai Deepwater KG2 rig of US rig contractor Transocean by three months for a dayrate of $295,000, which is $100,000 less than the previous contract. The new contract will expire in October. The official said aggressive bidding by rig players is likely to lead to rock-bottom dayrates in the ONGC tender. ONGC needs up to five rigs for developing oil and gas finds in its KG-DWN-98/2 or KG-D5 block in Bay of Bengal, where it plans to drill 45 development wells, starting next year. The company had in 2010 hired Platinum Explorer rig from Vantage for $585,000 a day and Sevan Driller-II from Norway's Sevan Marine ASA for dayrate of $524,900.