Financial Daily from THE HINDU group of publications
Tuesday, Aug 23, 2005
Industry & Economy - Petroleum
Increased oil, gas exploration Offshore support cos get flood of orders
Mumbai , Aug. 22
AS new tracts of sea bed off the country's coast are being taken up for offshore oil and gas exploration, a host of Indian and foreign companies engaged in providing a wide array of support services, ranging from underwater diving and construction works to geo-technical surveys, are steadily strengthening their economic moorings.
Although foreign companies continue to dominate the offshore support services market, especially those services requiring special technologies and expertise, Indian companies have of late been foraying into these segments or coming out with new, value-added services. "The services that offshore drilling and production require are huge in scope, particularly those that actually involve underwater operations. There is a lot of scope for companies engaged in these activities," says Mr Satpal Singh, Joint Managing Director of Dolphin Offshore, a company that specialises in diving and underwater services.
The support services begin from operation of different support vessels, such as supply vessels, construction barges, dynamic position diving support vessels, MSVs, geo-technical survey vessels and floating production system vessels, which is kind of a platform but without sea-bed support.
In fact, ONGC has called for tenders for operation of such a vessel to commence production at its damaged platform at Bombay High that was hit by a major fire recently.
While the gains of vessel operators are high in the wake of the growing market for these services, the earnings of smaller companies offering actual underwater services are no less significant. For example, Dolphin Offshore, which clocked a turnover of Rs 45 crore in 2003-05, raked in Rs 135 crore last year and at present is sitting on orders worth Rs 170 crore.
"We are the only Indian company offering special diving services for carrying out underwater repair and construction works. We have done the deepest dive ever in Indian waters at 220 metres and we are one of the few Indian companies qualified by ONGC to undertake marine construction activities," Mr Singh said.
Another Indian company that emerged in geo-physical surveys, an area that was earlier controlled by foreign companies, is Elcoma. There are still a host of areas, such as drilling services and under water cementing services, are still in the hands of foreign companies.
With the growing offshore exploration and production activities, the cost of these services have also increased, which have, in turn, increased the earnings of the companies offering such services. For example, ONGC used to hire rigs at $22,000 per day some seven or eight years ago, but today the same rig can be leased to ONGC at upwards of $65,000 per day.
Industry analysts say that as the offshore support services market is set to grow at a faster rate in the coming years, the market may see the emergence of new Indian players and new value-added services.
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