The Hindu Business Line : ONGC may give shipping cos time to modernise fleet

ONGC is keen on replacing its offshore supply vessels with new ones that have sophisticated equipment. But even if it were to give the ship-owners time to modernise their fleet, it may not be of any great help, as shipyards the world over are choc-a-block with new orders and, hence, cannot accept any new buildings for the next two years.

In what is seen as a small relief for the shipping industry, Oil and Natural Gas Corporation is likely to give shipping companies some time to modernise their offshore supply vessel (OSV) fleets. This follows a meeting that representatives of shipping and offshore companies had with the Petroleum Secretary on Thursday, seeking time to modernise their offshore fleet to suit ONGC's new requirement. Sources say the Petroleum Secretary had assured the Indian National Shipowners Association (INSA) that the Petroleum Ministry would ask ONGC to give them extra time.

A recent ONGC initiative to deploy sophisticated offshore supply vessels business had the shipping industry worried as it has about 30 such vessels on contract with the oil exploration major. As none of these vessels, which have been servicing ONGC for the last several years, meets the new requirements, each company may have had to look for work elsewhere.

Shipyards full up

ONGC is keen on replacing these older offshore vessels with new ones that have sophisticated equipment, such as on-board satellite-linked Diagonal Positioning (DP) facility, even if it means getting such vessels on charter from overseas. However, industry observers feel that even if ONGC were to give ship-owners time to modernise, it would not be of any significant help. For one, shipyards the world over are choc-a-block with new orders and, hence, cannot accept any new buildings for the next two years.

Two, even if the offshore vessel owners opt to modernise their fleets by fitting the ships with the DP facility, they would again have to approach yards to do the job. It is estimated that some of the bigger vessels in the offshore fleet could be equipped with the DP facility at a cost of Rs 2 lakh each, but this would take eight-nine months of delivery time. The satellite-linked DP facility on new generation vessels enables them to automatically shift position with the changing swell conditions in the sea.

"Even Indian shipyards, which can undertake modernisation of our vessels, are full. We just cannot bring in the new generation offshore vessels, even if we want to," an official of a private sector shipping company said.

ONGC Tender

In fact, ONGC made clear its intention of replacing its offshore fleet with modern vessels when it floated a tender on March 10 for chartering 26 offshore supply vessels, with mobilisation requirement up to the third week of November. T

he tender was to close on April 10, but ONGC re-opened it from May 23 to June 30, as it increased its requirement to 30 vessels.

As per the tender specification, none of the Indian shipowners, operating in the offshore segment, would qualify with its existing fleet of supply vessels.

Industry not shirking

According to industry representatives, it is not that the shipping companies are not willing to invest in modernising their fleet or buying the new generation vessels.

On the contrary, the Indian shipping industry has proposed significant investments to augment and modernise its offshore support fleet, in the wake of the boom in the oil and gas exploration sector.

GE Shipping, for example, has ordered six new offshore supply vessels, involving a cost of $86 million in the current fiscal; its present fleet comprises 33 offshore vessels. Varun Shipping, which is primarily in the LPG transportation business, also plans to invest $80-100 million for acquiring offshore assets, including platform supply vessels and specialised vessels.

Mercator Lines has just forayed into the offshore business by ordering the construction of a premium offshore jack-up oil-rig at a cost of Rs 810 crore with Keppel FELS.

The proposed investments come on the back of projections of increased activity in the offshore oil exploration and production sector.

Under the first five rounds of NELP, a total of 109 blocks were awarded — 36 onshore, 40 deep water and 33 shallow water. Under the recently announced NELP VI, 55 blocks are on offer for bidding — 25 onshore, 24 deep water and six shallow water.

The closing date for the bids is September 15 and the award announcement will be made four months after that.

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