The Hindu Business Line : Rig sharing concept yet to take off

New Delhi, Dec. 15 The ‘rig club’ project seems to be a non-starter among companies involved in oil and gas exploration activities in India, with the two big players, Reliance Industries Ltd (RIL) and ONGC, unable to reach a decision on the rig sharing concept.

In response to a Directorate General of Hydrocarbons’ (DGH) initiated rig-sharing project, almost 12 exploration & production (E&P) companies — both domestic and foreign — have associated themselves with the project.

The E&P companies are looking at various cost saving options, including rig pooling, in order to enhance their core activities.

Smaller cos ready

Official sources said, “While smaller companies are enthusiastic about the project, ONGC and RIL have not been able to take a call on the concept.”

At present, average rig hiring charges are in the range of $4,75,000-$5,00,000 per day. Indications are that the two companies are in favour of hiring their own rigs instead of sharing them.

RIL and ONGC, industry insiders say, have not made any commitments for rig sharing with other companies, since before committing, issues such as priority of using the rig, minimum work programme, and division of work need sorting out.

The concept of rig sharing may be beneficial for companies with smaller number of work programmes. However, companies such as ONGC or RIL it could be difficult, as they have large work programmes and need totally dedicated resources to fulfil the work programme, sources said.

Besides, the proposal of three year moratorium for completing drilling programme commitments is what companies such as RIL are looking for, they added.

Speaking to Business Line, DGH, Mr V.K. Sibal said, “The surge in global crude prices has led to an increase in demand for rigs, drilling equipment and services, affecting the availability of resources. The concept of rig pooling would enable companies to bring down the cost of hiring rigs, one of the major components for exploration activities.”

The 12 companies participating in the project are RIL, ONGC, Oil India Ltd, GAIL (India) Ltd, Niko Resources Ltd, Hardy Exploration, Gujarat State Petroleum Corporation Ltd, Hindustan Oil Exploration Company Ltd, Jubilant Oil & Gas, Cairn Energy, BG Exploration & Production India Ltd, and ENI.

Sources said, “Although both RIL and ONGC are into ultra deepwater and deepwater blocks drilling activities, their requirements are different.”

“The requirements of rigs are different for ONGC and RIL, as the stages of exploration activities vary in their blocks. The rig requirement for undertaking development activity is different than that for exploratory activity. ONGC currently requires more exploratory rigs in ultra deepwater, whereas RIL has entered into the development phase at its Krishna Godavari block,” sources said.

Related Stories:
John Energy’s rig commissioned
Rig unavailability may delay Reliance’s KG basin plans
Reliance may face further delay in rigs deployment
ONGC to procure 27 rigs in next three years

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Cement cos may feel the pinch as coal costs rise

Non-food credit surges in November

Rig sharing concept yet to take off

Indian markets among most expensive globally?

S Kumars close to Rs 500-cr overseas buy

UTV ready to go it alone in Hollywood

PE majors queue up for slice of domestic brokerages