ONGC is looking at relaxing eligibility criteria for hiring rigs in a move that could potentially put at risk the high stake business, casting doubts on its rationale given that rigs are available easy and cheap and the state run explorer can actually be more selective than ever.
So far rigs that have been lying idle continuously for three years or more were not eligible to bid for ONGC jobs due to safety concerns.
The change in clause, if approved, would allow rigs that have been lying idle for over three years, if they can produce certificate proving their fitness. “ONGC has received several representations for considering changes to the Bid Evaluation Criteria Clause with respect to rig idling. A committee is presently examining it,” ONGC said in a response to ET’s query.
Industry is surprised by the timing of ONGC’s decision as there is oversupply of rigs and the company does not need to relax norms, especially at the cost of safety.
In closed room off-record conversations, industry executives told ET that they suspect this move is to favour some specific service providers whose rigs haven’t drilled a single well in more than three years.
ONGC did not respond to a specific query on this allegation. “On the basis of committee report, a decision shall be taken considering the interests of the company, upholding transparent procurement procedures,” ONGC said. The proposal is likely to be considered by the company next week.
Over a year ago, ET had reported that ONGC was considering hiring nine rigs from private companies through nomination rather than the mandatory tendering process, triggering controversy over the reason behind it. The plan was scrapped after ET’s report. Industry sources alleged the same set of service providers were being “helped” then too.
Industry executives said recent tenders of international oil majors require that rigs have not been lying idle for more than 6-12 months. Globally, rig utilisation is less than 70% and availability of rigs is not a problem for ONGC. Industry executives said the firm’s move may be to support service providers at the time of slowdown, but they raised safety concerns. “Downturn in crude oil prices started hardly one and a half years back and until then, prices for hiring rigs was high and operators worldwide were busy.
We saw rig availability almost exactly matching ONGC requirement and sometimes supply did not match up to the demand. But that’s not the case now. So why relax the norms now?” asked a senior executive. Thomas Vanek JerseyShare This