ONGC Plans to Buy 10 Onshore Drilling Rigs for About $240MM

MUMBAI (Dow Jones Newswires), Sep. 19, 2011

Oil & Natural Gas Corp. plans to buy 10 onshore rigs for about INR11.5 billion ($240 million), in line with its plans to boost exploration and development activity, a senior executive in India's flagship explorer said.

"We plan to acquire six deep-drilling rigs and four mobile drilling rigs for our onshore operations," the executive, who declined to be named, told Dow Jones Newswires recently. "This will take about 18 to 20 months."

ONGC, India's largest oil and gas exploration and production company by acreage, is spending billions on exploration and drilling programs over the next few years to arrest declining output and meet surging demand for energy in the world's second-fastest growing major economy.

ONGC accounted for 65% of India's crude oil and 44% of its natural gas output in the year ended March 31. However, a majority of the company's fields have been in production for several decades and it hasn't been able to bring any new big field into production.

ONGC also operates an oil field services division that provides drilling services for its exploration projects.

It currently owns and operates 68 onshore drilling rigs and nine offshore drilling rigs, the state-run explorer said in its share sale document last week. These rigs are in addition to the 20 onshore rigs and 25 offshore rigs it leases from other firms, ONGC said.

The six deep-drilling rigs are estimated to cost a total of about INR8 billion and will likely be purchased from Bharat Heavy Electricals, the executive said. However, he said the orders are yet to be placed.

"For the mobile rigs, we might go in for a tender," the executive said, adding the four mobile rigs may together cost about INR3.5 billion. He declined to say when the tender would be floated.

ONGC's onshore exploration areas are located in India's major sedimentary basins including the Cambay basin and Jaisalmer basin in the west, and the Assam and Assam-Arakan basin, Krishna-Godavari basin and Cauvery basin in the east.

These cover the states of Andhra Pradesh, Assam, Gujarat, Himachal Pradesh, Madhya Pradesh, Nagaland, Rajasthan, Tamil Nadu Tripura and West Bengal.

Copyright (c) 2011 Dow Jones & Company, Inc.


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