Business Daily from THE HINDU group of publications
Thursday, Dec 21, 2006
Markets - Stocks
Industry & Economy - Petroleum
Mumbai , Dec. 20
As the quest for discovering oil hidden deep under the sea bed gathers momentum, shares of Indian companies engaged in providing offshore support solutions to oil exploration companies have been riding high on the bourses, despite the market volatility.
Indications are that the demand for offshore support vessels and drilling rigs will further increase in the coming years, which may sustain the bull ride of these companies, say analysts.
Companies such as Aban Offshore, Dolphin Offshore, Garware Offshore and Duke offshore, apart from shipping companies such as Great Eastern Shipping that are operating in this space, have seen brisk trades at the counters in the last few weeks.
The stock of Aban Offshore has gained by almost 14 per cent week on week to end the day at Rs 1,215, up 2.95 per cent on the BSE. Dolphin Offshore, which saw a gain of 5 per cent over the past week, was quoting at Rs 318 at end of trade today. Garware Offshore has witnessed an 89 per cent gain month on month, ending at Rs 267.55, up almost 5 per cent.
The biggest development in this sector was the announcement of NELP-VI in February this year, under which a total of 55 blocks are on offer, including 30 offshore blocks. Further, ONGC, along with its overseas arm ONGC Videsh Ltd, and ONGC Mittal Energy and Reliance Industries Ltd have been scouting for opportunities all over the world.
OMEL has bagged two blocks in Nigeria, estimated to have reserves of about 500 million barrels each. "All this is good news for companies that provide offshore support services," an analyst pointed out.
During 2005-06, about 35 drilling rigs were in operations off the Indian coast, but at present 45 rigs are operating in Indian waters "In the next year, the number of rigs operating in India is expected to go up further as exploration by drilling companies is on the rise.
Internationally, a rig could fetch a daily hire charge of about $ 3,00,000 at present," the analyst said.
Worldwide, the number of mobile rigs has gone up from 642 to 651 in the last one year.
The increasing demand for rigs is forcing companies to put into service after overhauling even those rigs that were mothballed or were lying idle for many years.
The demand for offshore support vessels is also expected to go up significantly. ONGC, given its ageing fleet, has floated a tender for 33 offshore vessels, while other oil exploration companies have sounded out for more such vessels.
At present there are 65 offshore support vessels, excluding ONGC-owned vessels, in operating in India.
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