The Hindu Business Line : Mercator Lines to foray into offshore oil exploration

Big plans
To bid for Indian offshore blocks under NELP bids, apart from overseas blocks, including some of the South East Asian and Arabian Gulf blocks.
In the process of acquiring a $180 million drilling rig.
Plans to get into offshore construction, including construction of platforms and pipelines.

Mumbai Jan. 11

Shipping major, Mercator Lines, is planning to expand its business portfolio by foraying into the offshore oil exploration sector.

To form consortium

The company is looking for global partners to form a consortium to bid for Indian offshore blocks under the forthcoming round of NELP bids, apart from overseas blocks, including some of the South East Asian and Arabian Gulf blocks.

It is in talks with a few European companies, sources said.

Mercator Lines, which has forayed into offshore support services and is in the process of acquiring a $180 million drilling rig, is aiming at forward integration by getting into the exploration business, which would also give it a captive market for its fleet of rigs and other offshore assets.

The company's foray into the oil exploration segment will be spearheaded by its subsidiary, Mercator Oil and Gas Ltd (MOGL).

The subsidiary had earlier initiated a foray into offshore segment by tying up with Gujarat State Petroleum Co, but the move did not result in anything concrete.

Apart from offshore exploration, Mercator also has plans to get into offshore construction, including construction of platforms and pipelines, the sources said.

Pact with Russian co

Mercator already has a technical tie-up with the Russian oil major Luke Oil for operation of the jack-up rig it has ordered — the rig is expected for delivery in March 2009. As part of this agreement, Luke Oil personnel will help the Indian company in the operation of the rig.

Demand for rigs

With offshore rigs being in high demand in recent times, the shipping company is also planning to get two or three rigs on lease.

"The company is scouting for rigs in the global market," a source said.

Apart from Mercator, Jindal Offshore has placed on order two rigs and Great Eastern Shipping one rig, which are expected for delivery after the first quarter of 2009.

The rush for rigs is understandable in the light of the zooming day hire charges for these offshore assets, which have nearly tripled since 2005.

Currently, a rig under a six-month contract can fetch a day charge of $2,60,000, while rigs under three-year time contract can attract a day rate of $2,20,000.

India is considered to be the second-biggest market for rigs, with offshore exploring getting a boost in recent times. Transocean, the world's biggest offshore drilling company, may raise rig prices, an industry analyst said.

In fact, explorers have drilled less than half of the 218 wells dished out under exploration licences awarded by the Government since 2000.

More Stories on : Diversification | Shipping | Petroleum

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