Sinking of buoy hits ONGC operations

India's biggest oil explorer, Oil and Natural Gas Corporation (ONGC), is having a tough time with its Bombay High operations as a single buoy mooring (SBM), crucial to its oil drilling operations, sank in the high seas on July 7.

An SBM is a round buoy which is fixed to the seabed by chains. These SBMs, worth Rs400 crore each, are used for facilitating the loading of oil to offshore oil tankers from the production platforms.

Sources say the SBM sank along with 10,000 tonnes of oil, which is also causing a concern of oil spill in Bombay High, situated 160 km off the Mumbai coast.

"One of the SBMs installed in the North field got damaged due to the hostile monsoon in the first week of July. Considering bad weather conditions and safety reasons, the SBM could not be repaired and slowly sank on July 6, 2007," the oil major said.

"This was connected to one of the platforms in the North Alpha (NA) field for evacuating the oil through marine tankers. The equipment maker, SBM Inc, is being consulted to retrieve and repair SBM at the earliest," ONGC said in a statement.

Since the accident, ONGC had to discontinue oil loading through oil tankers and the oil produced from this platform was then diverted through Bombay-Uran trunk subsea pipeline to Uran, the oil major said.

Also, production from one of the well platforms connected to NA field was diverted to another platform. The oil production of North Alpha field prior to the SBM damage was approximately 14,000 billion barrels a day. ONGC has not suffered any production losses for the NA field SBM, it clarified.

ONGC is exploring various options for early replacement of SBM and said it had insured the SBM under ONGC's Offshore Package Policy, 2007-08, for a value of $21.576 million.

A senior official of United India Insurance, which is the lead insurer for the policy, said, "We have received a letter dated July 13 informing us about the SBM. We have informed the broker (Aon Global) and overseas reinsurers who will be sending surveyors. The surveyors will give us a report on the reasons and the quantum of the damage."

In case, the SBM could not be retrieved from the seabed, United India will have to then pay the total sum of $21.576 million to ONGC.

ONGC's insurance policy is the country's largest insurance policy. Insurance policies, where the sum insured is Rs2,500 crore and above, are called large risk policies and are largely reinsurance driven. The reinsurers decide the terms and conditions of the policy.

ONGC has insured all its offshore assets under the Energy Package Policy. United India is the lead insurer, while the remaining three public sector insurers "" New India Assurance, Oriental Insurance and National Insurance "" are co-insurers.