The Hindu Business Line : 11 E&P cos team up for rig-sharing project

Exploration and production (E&P) companies are looking at various cost-saving options to enhance returns from their core activities. According to a senior Government official, 11 E&P companies, both domestic and foreign, have associated themselves with the rig-sharing project initiated by the Directorate-General of Hydrocarbons (DGH).

This would enable the companies to bring down the cost of hiring rigs, one of the major components for exploration activities, the official said.

With the international crude prices hovering over $70 a barrel, the pressure is on the companies to speed up exploration efforts to enhance production.

As per industry estimates, drilling rates for sophisticated deepwater rigs have gone up from about $200,000 a day to $400,000 in the last one-and-a-half years. Hiring rigs rather than owning them is a preferred option for oil exploration companies, especially if a field has not yet been discovered, he told Business Line.

The 11 companies participating in the project are Oil India Ltd, GAIL (India) Ltd, Reliance Industries Ltd, Niko Resources Ltd, Hardy Exploration, Gujarat State Petroleum Corporation Ltd, Hindustan Oil Exploration Company Ltd, Jubilant Oil & Gas, Cairn Energy, BG Exploration & Production India Ltd and ENI.

Oil and Natural Gas Corporation (ONGC), however, is not part of the project, till now. According to sources, ONGC has declined the proposal since it was in a comfortable position as far as its own rig requirements are concerned.

The 11 companies have agreed to pool in their requirements and plan a joint strategy, the Director General of Hydrocarbons (DGH), Mr V.K. Sibal, said.

The intention is that in this resource strain era, the companies can save cost by sharing rigs through a long-term agreement, he said.

The companies plan to jointly hire rigs through a Norwegian service provider.

The experts from Norway are expected in the next two months, he said. A study will be conducted a copy of which will be sent to all the 11 companies, he said.