ONGC to speed up exploration in western offshore, hire another rig

Government-owned Oil and Natural Gas Corporation (ONGC), the country’s largest petro exploration company, wants to hire an ultra deep-sea drill rig, the daily cost of which is about Rs 5 crore.

This is to improve exploration in the western offshore blocks. Earlier this quarter, ONGC had hired the rig Dhirubhai Deepwater KG-1 from Reliance Industries Ltd on an assignment basis for $495,000 to $510,000 a day for four years.

“We are looking to hire one more rig from December 2010 onwards. A shortage is being felt in ultra deepwater rigs, though there is no problem in the shallow water rigs,” said D K Pande, director (exploration) in the company, without disclosing from where ONGC plans to hire such a rig.

Though crude oil prices have come down sharply from last year’s July peak of $147 a barrel, the cost of hiring rigs has remained firm. “The cost of hiring rig services now is similar to last year, when we paid $500,000-700,000 for each day,” he added.

ONGC has been unable to take up drilling in the deepwater western offshore blocks due to non-availability of deepwater rigs. Nor could drilling in the Gulf of Cambay be undertaken due to non-availability of suitable rigs. In 2007-08, for instance, it was able to utilise only 78 per cent of the Rs 3,113 crore exploratory drilling outlay due to the non-availability.

Pande said the government is planning to allow a three-year drilling moratorium to the exploration companies and this will be of great help to ONGC. Companies such as ONGC and RIL have not been able to meet their work commitments for the blocks they had won under the New Exploration Licensing Policy rounds due to a crunch in availability of deep-sea drilling rigs and the moratorium is being considered to help them. Of the blocks where the drilling moratorium would apply, 16 are with ONGC, 14 with Reliance and one with ENI of Italy.