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Rediff.com  » Business » ONGC hires drilling rig for Rs 2.39 cr per day

ONGC hires drilling rig for Rs 2.39 cr per day

June 18, 2013 16:55 IST

State-owned Oil and Natural Gas Corp (ONGC) has signed a contract to hire a long-idled ultra-deepwater drillship of US-based Transocean for $412,000 (about Rs 2.39 crore) per day.

ONGC hired 'GSF Explorer' drilling rig for one year beginning July at a dayrate of USD 412,000, the oil rig contractor said in its latest fleet update. GSF Explorer is capable of drilling up to 30,000 feet in water depths of up to 7,800 feet, Transocean said.

According to Transocean, GSF Explorer was built in 1972 and upgraded in 1998.

ONGC hired drillship GSF Explorer after recently cancelling a deal with a rival driller. A contract to hire the rig was signed on May 24 ending months of re-tendering and negotiations between ONGC and Transocean.

Sources said Transocean had emerged as the sole bidder in an initial tender floated by ONGC for hiring an ultra-deepwater rig last year. It offered a two-year contract at $601,000 per day, which ONGC felt was too high.

ONGC re-floated the tender and ultimately selected Russian player Arktikmorneftegazrazvedka, the lowest bidder, which offered the drillship Deep Venture for two years at $399,000 per day.

But the deal fell through because the Russian player did not submit performance bank guarantee and did not mobilise the rig on time. The Russian firm said it would make available the rig not before October as against ONGC's target of April-end.

Arktikmorneftegazrazvedka said there were blowout preventer issues with the Deep Venture that needed to be rectified before mobilising. ONGC cancelled the contract and began negotiating with Transocean for the GSF Explorer.

Sources said Transocean had quoted a dayrate of $512,000 in the re-tender but ONGC was able to beat the prices down since the rig had been moored in Singapore since September without a contract.

ONGC plans to use the rig to appraise discoveries it had made in a Krishna Godavari basin block KG-DWN-98/2, which sits next to Reliance Industries' production KG-DWN-98/3 or KG-D6 gas blocks.

The company has so far made 9 discoveries including the ultra-deep sea UD-1 find. Without including the UD-1 find, the block holds at least 4.85 trillion cubic feet of gas reserves that can produce a peak of 22 million standard cubic metres per day of production by 2016-17.

Sources said ONGC has planned eight wells on the block this year.