Shortage hit oil cos share rig

NEW DELHI: Competitors in the petroleum market are now turning friends. Oil majors RIL, ONGC and Eni of Italy have decided to share the scarce resource — rigs.

They have mandated Norwegian firm Rig Management Norway (RMN) to contract a deepwater rig on their behalf for five years. The rig will be shared by the trio for undertaking their respective exploration & production (E&P) activities in the east coast.

“RMN has been asked to float a tender, inviting bids for the first deepwater rig to be shared by RIL, ONGC and Eni for five years. Rig-sharing will help E&P companies cut down their cost, consequently (resulting in) a larger revenue for the government,” an official in the Directorate General of Hydrocarbon (DGH) told ET.

There is a scarcity of rigs globally and hiring a rig has become very costly. The cost has gone up manifold. For example, RIL is paying $320,000 per day to Transocean, the world’s largest offshore drilling contractor, for its rig ‘Deepwater Frontier’, which commanded a rent of $145,000 per day from its previous tenant. Fresh contracts of a deepwater rig is as high as $500,000 per day.

This is the first instance of rig-sharing in the country. However, such a concept does exist in the Gulf of Mexico and Norwegian fields where RMN worked as a consultant, the official said. As per the mutual agreement, the rig will serve interests of the three operators in the hydrocarbon-rich east cost, comprising the Mahanadi basin, the KG basin and the Cauvery basin.

Explaining the concept of rig-sharing, the official said the rig would move to another block after drilling a well in one block while the first block will be getting prepared for a drilling exercise. Thus, idling of the rig will be avoided. The functioning of the rig will be optimised on the basis of priority, already mapped by the consultant.
Besides maximising of rig-use, the sharing would help all the three operators in having a common knowledge pool. Crew of the rig would be the same for all blocks, hence, their valuable experience could inevitably be shared for the common benefit. It will also help in providing common associated services such as cementing, logging and HSE (health, safety and environment).

“The experience of making the first rig-sharing a reality was not very easy,” says the official. Initially, the consultant went to offices of 10 E&P firms — RIL, ONGC, BG, HOEC, Hardy, Niko, Jubilant, GSPC, Cairn and Eni — and made presentation to them. After series of meetings, the first rig-sharing could be made possible.