Reliance, ONGC in talks for sharing of rigs

Traditional competitors Reliance Industries Ltd (RIL) and Oil and Natural Gas Corporation (ONGC) are now working towards co-optition (where competitors work with each other) by sharing infrastructure and facilitating smooth operations in each other’s exploration and production (E&P) activities.

Indications are that RIL may offer rigs to ONGC in two or three locations in 2008-09. These rigs are mainly for undertaking exploration activities. The shortage of rigs for E&P activities has forced the two major players in India to come to the table for sharing rigs.

rig sharing

Speaking to Business Line, Mr D.K. Pande, Director (Exploration), ONGC, said, “We are interacting with each other to see if mechanisms for rig sharing can be worked out. Besides, we are also trying to see that we facilitate smooth operations in each other’s E&P activities in areas where our blocks are adjacent. “RIL rigs could be available only after the private sector player has finished its exploration activities and enters the development phase. The rig requirements for both the companies are different, as the stages of exploration activities vary for them. ONGC currently requires more exploratory rigs in ultra deepwater, whereas RIL has entered into the development phase at its prolific D6 Krishna Godavari (KG) basin block.

hiring charges

Currently, average rig hiring charges are in the range of $4,75,000-5,00,000 per day. The two companies have, till now, been following the system of hiring their own rigs instead of sharing them. But with the international market dynamics showing scarcity in rig availability, the two players are looking at joining forces.

On how the two propose to facilitate smooth functioning of each other’s operations, sources said, “The two companies have decided to cooperate by not interfering in each other’s activities by adjusting their operations”. While RIL is in the process of constructing its pipeline for transporting its D6 KG basin gas to the delivery point, in the adjacent block in the same basin ONGC is undertaking its seismic activities. Thus, the two have decided to cooperate for facilitating smooth operations, as cost involved are also huge, sources said.
discoveries

ONGC, which has been drawing flak for going slow on its E&P activities, has already made 18 discoveries in its various acreages during the current fiscal. The company, which already has its own fleet of rigs, has been in talks with global oil firms for rigs for drilling appraisal wells in its successful assets in Mahanadi and Krishna Godavari basins including ultra deepwater wells. ONGC has to drill close to six-eight appraisal wells.