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Friday, Nov 05, 2004

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GE Shipping to focus on offshore biz

Amit Mitra

Mumbai , Nov. 4

GREAT Eastern Shipping is planning to sharpen its focus on its offshore business in the light of the increasing oil exploration activities in India. The company is considering moving into the higher asset spectrum in this segment, like pipe-lay barges.

GE Shipping, which at present owns 30 offshore units, is also in the process of acquiring eight offshore vessels that would be delivered between January 2005 and mid-2007.

"During the last quarter, the main drivers of oil and gas prices have been the demand coupled with concerns on supply apprehensions. This led to continuing re-development work globally. In India, ONGC has undertaken re-development of its Bombay High fields, which is expected to be completed by 2006. Other operators like reliance, cairn and Hardy have also initiated such operations," a senior company official pointed out.

In fact, ONGC has initiated its largest data acquisition programme, which is seen as the precursor for fresh drilling activities. India has become an important player in the global exploration and production sector and with NELP-V round the corner this sector is expected to see increased activity.

Indeed, downstream companies have planned to increase their spending in exploration and production activities, with major players likely to spend Rs 7,000 crore to Rs 8,000 crore annually. "Some of offshore assets of the company have already been fixed, with the utilisation rate at 94 per cent. The revenue visibility of the offshore division for the next six months is Rs 105 crore," according to the official.

He pointed out that the most volatile part of the offshore business is the construction business, as it is totally on spot basis. "The offshore market being a tender-driven business, it is largely driven by period work, which could range from one well to one year or even three years. We may consider moving into a higher asset spectrum, like pipe-lay barges, which would cost between $20 million and $100 million, depending on the size. We are also looking at possible expansions in rigs," he said

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