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BHEL plans to tap global oil rig shortage

State-run Bharat Heavy Engineering Ltd is scouting for a technology partner to foray into manufacturing of off-shore deep-water oil rigs as part of its diversification programme, reports Samiran Saha.

business Updated: Aug 18, 2008 22:52 IST
Samiran Saha

State-run Bharat Heavy Engineering Ltd (BHEL) is scouting for a technology partner to foray into manufacturing of off-shore deep-water oil rigs as part of its diversification programme.

BHEL has been in the past supplying electrical on-shore rigs to exploration giant, Oil and Natural Corporation (ONGC) but now wants to get into the big league of manufacturing deep-water oil rigs.

The company has initiated discussions with ONGC and private corporations for the proposed foray, a senior official with BHEL said on conditions of anonymity.

BHEL recently bagged Rs 700-crore order for refurbishing 12 on-shore oil rigs for Oil India Ltd and ONGC, and is keen to take its expertise ahead in the oil exploration business.

There are about 180 oil rigs (both on-shore and off-shore) currently in operation in the country.

Oil industry watchers said the unavailability of rigs has impacted around 25 off-shore fields in India, where the first phase of exploration is complete and drilling is required. The ONGC has put on hold its deep-water exploration for the moment.

The cost of leasing a rig has gone up six times in as many years to Rs 6 crore a day from Rs 1 crore.

An ONGC official said many suppliers are not keen to extend existing leases as they are commanding higher prices in the wake of frantic pace of exploration activities in Asia and Latin America. The drought for rigs is expected to continue till 2010, the official said.

According to the BHEL official, all international rig-building yards have their hands full for the next two to three years and there is an acute shortage of experienced engineers in the business.

The price of an oil rig ranges from Rs 450 crore to Rs 4,800 crore. India’s oil exploration companies are now contemplating to pool rigs through joint contracts with suppliers to prevent delay in exploration activity.

According to Baker Hughes, a global oil field services company, as high 62 per cent of India’s current exploration activity has been affected due unavailability of rigs.