Essar Oil Leases Back Rig From Purchaser
Essar Oil has leased back the offshore oil rig from the purchaser to complete its contract with Oil and Natural Gas Corporation (ONGC).
Essar Oil sold its rig to Nobele-Neddrill Asset Company in December last year.
In a statement on December 23 last year, Byron l Welliever, senior vice-president, finance and treasurer of Nobele, said the rig has been "chartered back to the seller for the duration of the seller's current contract with ONGC". Nobele will get back the rig after March when the ONGC contract expires.
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Essar is also talking to other international buyers to sell its second rig, Essar Discovery, which is lying in Chennai.
R K Sukhdevsinhji, managing director of Essar Oil, said this is a normal practice in international drilling operations and the company was just taking advantage of the price. Essar Explorer is reported to have fetched around Rs 90 crore.
"The arrangement was that they buy the rig, and let us retain it till we finish the contract. It is a standard practice worldwide. We could have waited till we completed the contract in March, but we got a very good deal and took advantage of it. If we had waited, no one knows what would have happened. If crude prices had gone down, rig prices would also have followed suit," he said.
He denied the money collected from the sale would be used to boost profits or retire older debts. "These rigs are old, and there are no debts on them. The money will be re-invested in the business," he said However, top industry sources said it was an attempt by Essar to boost profits for the current year and not a restructuring as claimed.
After the sale of the two rigs, Essar would be left with only on-shore rigs, which would be of little use in the development of the company's Ratna and R-series oilfields awarded to them.
"For these operations, we can always take equipment on contract. It is not necessary that we use only our equipment. For all you know, these rigs may not even fit with Ratna," Sukhdevsinhji explained.