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ONGC waves the flag to start jack-up bid race

Market buzz as offshore players line up for as many as eight rig deals in a variety of categories

India’s Oil & Natural Corporation (ONGC) has issued a tender to charter as many as eight jack-up drillings rigs in several categories on three-year terms.

The much-awaited rig tender is expected to whet the appetite of work-starved offshore rig contractors, as long-term drilling charters have dried up elsewhere following the industry downturn.

The new tender has created a lot of excitement in the drilling market and leading domestic and international rig contractors are expected to queue up, according to industry sources.

“We believe that ONGC will get a tremendous response from rig contractors, as there is a lot of idle capacity in the jack-up market,” one source said.

Technical and commercial offers are likely to be submitted by June and contractors are hoping that the drilling units could be mobilised by first half of 2018.

“Contractors will have 180 days from the date of notification of award to mobilise those drilling rigs. We believe ONGC will start mobilising (the rigs) by March or April next year,” the source said. 

The domestic contractors likely to offer rigs include Jindal Drilling, Deepwater Drilling, Aban Offshore, Jagson Drilling and Greatship, with Aban tipped by one source as likely to offer most units.

“Aban is expected to bid aggressively as it has quite a few jack-up rigs lying idle,” he said.

International drilling contractors including Shelf Drilling of the United Arab Emirates, UK-headquartered Ensco and Hallworthy, and China Oilfield Services Ltd (COSL) are also expected to show interest, sources added.

ONGC has split its requirement into four categories. In the first, ONGC requires five independent leg, cantilever type jack-ups, capable of drilling in up to 300 feet of water. The rigs being offered in the first category should either be of MLT, BMC or Levingston III-C design, drilling sources said.

For the second category, ONGC is said to want one 300-foot cantilever type drilling rig of F&G L780 Mod II design.

In addition, the Indian state-controlled giant requires one 300-foot slot or cantilever type jack-up rig in the third category and another 300-foot slot or cantilever type jack-up drilling rig in the fourth category, which is capable of operating in high-pressure, high-temperature conditions, sources said.

The eight-rig jack-up tender was expected to be offered in January, but got delayed by more than three-months as ONGC was finalising the tender conditions, one source said.

Dayrates for jack-ups are expected to fall further, as the offshore rig market remains largely over-supplied, with few jobs in the market.

One drilling source claimed some of the battered domestic drilling contractors could offer rock-bottom dayrates to ONGC, which could be difficult to sustain in the longer term.

“We are looking at three-year rig contracts. And drilling players offering exceptionally low day-rates could be in trouble,” one source said.