Financial Daily from THE HINDU group of publications
Monday, Jun 05, 2006
Financial Daily from THE HINDU group of publications Monday, Jun 05, 2006 |
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Logistics
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Shipping ONGC for hi-tech supply vessels Amit Mitra
An initiative by ONGC to deploy modern and sophisticated offshore supply vessels for its offshore oil exploration and production business could be a setback to Indian ship-owners, who have more than 30 vessels contracted to the oil exploration major. Most of these vessels, which have been in ONGC's service for the last several years, do not meet the new requirements of the oil company and, hence, may soon have to look for greener pastures in the offshore sector elsewhere. Indications are that ONGC is keen on replacing these older offshore supply vessels with new ones that have sophisticated equipment, like on-board satellite-linked Diagonal Positioning (DP) facility, even if it means getting such vessels on charter from foreign owners. Informed sources told Business Line that the Ministry of Shipping is likely to take up the issue with the Petroleum Ministry, and will ask for time for the shipping industry to modernise its offshore fleet in tune with ONGC's new requirements. In fact, ONGC made clear its intention of replacing its offshore fleet with modern vessels when it recently floated a tender for chartering about 26 offshore supply vessels, with the mobilisation requirement in the third week of November 2006. As per the specifications, none of the Indian ship-owners will qualify for the tender.
New-generation vessels
The new generation offshore vessels are equipped with on-board satellite-linked DP facility, which enables the vessels to automatically shift position according to the changing swell conditions in the sea. The shipping industry is willing to install this facility on its offshore vessels, but it has asked ONGC to give it some time to complete this modernisation. It is estimated that the ship-owners will have to invest some Rs 2 lakh on each vessel to put this technology in place, and they will need eight to nine months of delivery time. Moreover, the ship-owners argue that for this facility to work, there has to be a compatible satellite link on the ONGC platforms, as it is such a link that would communicate the changes in swell conditions to the on-board DP facility for automatic re-positioning of the vessel. In fact, the 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.
Capitalising on the boom
It is this boom that has largely prompted GE Shipping to de-merge its offshore division into a separate company, Great Offshore Ltd, to get higher valuations from this business. The company, which has a fleet of 33 offshore supply vessels, has on order six new offshore supply vessels at a cost of $86 million for this fiscal. Varun Shipping, which is primarily in the LPG transportation business, also plans to invest between $80 million and $100 million for acquiring offshore assets, including platform supply vessels and specialised vessels. "We are looking at the Indian (offshore exploration) market, but we will also look out for overseas orders," a senior company official said. Mercator Lines has just forayed into the offshore business by placing an order for the construction of a premium offshore jack-up oil-rig at the cost of Rs 810 crore with Keppel FELS. Scheduled for delivery by March 2009, the rig will meet operational requirements in water depths of up to 350 feet.
Increased E&P activity
The proposed investments come on the back of projections of increased activity in the offshore oil exploration and production sector. In the last four years, ONGC and OIL made 25 significant hydrocarbon discoveries, including 10 offshore, while the private sector has made 32 significant discoveries, both in NELP and pre-NELP blocks. These discoveries were made in five major areas — Mahanadi-NEC offshore, Krishna-Godavari offshore, Gulf of Cambay, on-land Rajasthan and Cambay basin. In the first five rounds of NELP, a total of 109 blocks were awarded — 36 onshore, 40 deep water and 33 shallow water blocks. Under the recently announced NELP VI, as many as 55 blocks are on offer for bidding — 25 onshore, 24 deep water and six in the shallow water. The closing date for bids in this round is September 15, 2006 and the award announcement is to be made four months from that date.
Deep-water potential
With most of the shallow water resources already exploited, huge potential has been identified in the deep-water offshore sector the world over. Currently, offshore drilling (as measured by rig count) is roughly 30 per cent of all international drilling. In fact, the latest numbers emanating from various parts of the world on oil demand, point to Asia-Pacific as the most important oil consumption region. This, in turn, has resulted in increased oil production in this area. According to the forecast by MacKay Consultants of Scotland, the Asia-Pacific region's oil production is expected to increase from 3.48 mmbd in 2003 to 6.7 mmbd in 2009, a jump of 92.3 per cent. This region is expected to claim about 35 per cent of global offshore drilling in 2009, up from 30 per cent in 2003.
Related Stories: More Stories on : Shipping | Oil & Natural Gas Corporation Ltd
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