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Oil Rig Owners are Smiling all the way
Saturday, June 2, 2007
India`s Rig Shortage Forces Delay in Exploration Rights Auction
India has put off an auction of oil exploration rights by five months as a rig shortage delays drilling in existing fields and slows a quest to cut dependence on imports.
The nation`s seventh annual offer for oil and gas fields has been delayed until August from March, Director General of Hydrocarbons V.K. Sibal said yesterday.
Explorers led by Oil & Natural Gas Corp. have drilled less than a 10th of the 880 wells agreed under exploration licenses awarded by the government since 2000, according to data from his office.
Oil companies including Reliance Industries Ltd. and Italy `s Eni SpA can`t keep pace as India offers a record number of areas for prospecting. The government has asked operators to share equipment to hasten discoveries that would reduce reliance on oil imports. India `s oil purchases last year made up about 29 percent of imports, contributing to a record $57 billion trade deficit in the year ending March 2007.
``India would be among the countries having the biggest number of outstanding drilling commitments, `` Tor Gunnar Gloppen, chief operating officer of Rig Management Norway AS, said by telephone from Oslo on May 23.
India is helping explorers to tackle the rig shortage by extending drilling deadlines in license agreements.
``We are in talks with the petroleum ministry on extending exploration agreements from the third and fourth rounds of auctions,`` Sibal said in an interview. ``We don`t plan to suspend any contracts.``
Sharing Rigs
Reliance and Oil & Natural Gas Corp., India`s biggest companies, and Eni, Italy`s biggest oil company, have agreed to share drilling equipment and will advertise to jointly hire rigs and seismic equipment for projects on India`s east coast, according to Sibal.
Canada`s Canoro Resources Ltd., Premier Oil Plc and Oil India Ltd. are cooperating in the northeast region while a group, including Oil & Natural Gas and Reliance, is being formed for projects on the west coast, Sibal said. Indian operators and the regulator funded a $100,000 study by Rig Management on sharing exploration services.
``We are trying to arrange rigs which will move from one operator to another and this may be cheaper,`` D.K. Pandey, exploration director, Oil & Natural Gas, said in an interview on May 17. ``We have to sort out scheduling for individual operators.``
Sharing resources will enable companies to reduce costs. The cost of renting rigs has tripled since 2005 for contracts extending to 2012.
Very Bullish
Transocean Inc., the world`s largest offshore oil and gas driller, said May 2 surging demand for rigs had enabled the company to build an order book worth $21.4 billion at the end of March for projects extending as far out as 2015.
``The market is very bullish, both on the onshore and the offshore sectors,`` V.K. Agarwal, who heads India `s Essar group`s rig business, said on May 17. ``People are not getting rigs.``
The company, which owns 14 rigs, leased a deepwater rig to Gujarat State Petroleum Corp. last month for about $340,000 a day.
Reliance is paying $320,000 a day until August 2008 to rent the Deepwater Frontier, more than twice the rate Transocean charged an earlier client, according to Transocean`s Web site. The tariff will rise to $477,000 a day, when Reliance extends the contract in 2008 for another three years.
Explorers in Norway , the North Sea, West Africa and the Gulf of Mexico have accelerated drilling plans and reduced costs at deep-sea ventures by sharing rigs, said Rig Management`s Gloppen.
Very Fast
`` India is very fast in offering acreages,`` said Ian Blakeley, a manager responsible for India at IHS Inc., an oil services provider. ``The operators are slower in exploration. ``
Gujarat State Petroleum, which said in 2005 that it made India `s biggest gas discovery with estimated reserves of 20 trillion cubic feet, has not met half of its drilling commitments after two extensions, the company`s partner in the field, Geoglobal Inc., said in its annual report.
The shortage of offshore services may delay production to ``later 2008`` at Reliance Industries` gas development in Krishna Godavari, Tristone Capital Ltd., an energy investment bank, said March 8 in a report about Canadian explorer Niko Resources Ltd., Reliance`s partner in the field.
India has put off an auction of oil exploration rights by five months as a rig shortage delays drilling in existing fields and slows a quest to cut dependence on imports.
The nation`s seventh annual offer for oil and gas fields has been delayed until August from March, Director General of Hydrocarbons V.K. Sibal said yesterday.
Explorers led by Oil & Natural Gas Corp. have drilled less than a 10th of the 880 wells agreed under exploration licenses awarded by the government since 2000, according to data from his office.
Oil companies including Reliance Industries Ltd. and Italy `s Eni SpA can`t keep pace as India offers a record number of areas for prospecting. The government has asked operators to share equipment to hasten discoveries that would reduce reliance on oil imports. India `s oil purchases last year made up about 29 percent of imports, contributing to a record $57 billion trade deficit in the year ending March 2007.
``India would be among the countries having the biggest number of outstanding drilling commitments, `` Tor Gunnar Gloppen, chief operating officer of Rig Management Norway AS, said by telephone from Oslo on May 23.
India is helping explorers to tackle the rig shortage by extending drilling deadlines in license agreements.
``We are in talks with the petroleum ministry on extending exploration agreements from the third and fourth rounds of auctions,`` Sibal said in an interview. ``We don`t plan to suspend any contracts.``
Sharing Rigs
Reliance and Oil & Natural Gas Corp., India`s biggest companies, and Eni, Italy`s biggest oil company, have agreed to share drilling equipment and will advertise to jointly hire rigs and seismic equipment for projects on India`s east coast, according to Sibal.
Canada`s Canoro Resources Ltd., Premier Oil Plc and Oil India Ltd. are cooperating in the northeast region while a group, including Oil & Natural Gas and Reliance, is being formed for projects on the west coast, Sibal said. Indian operators and the regulator funded a $100,000 study by Rig Management on sharing exploration services.
``We are trying to arrange rigs which will move from one operator to another and this may be cheaper,`` D.K. Pandey, exploration director, Oil & Natural Gas, said in an interview on May 17. ``We have to sort out scheduling for individual operators.``
Sharing resources will enable companies to reduce costs. The cost of renting rigs has tripled since 2005 for contracts extending to 2012.
Very Bullish
Transocean Inc., the world`s largest offshore oil and gas driller, said May 2 surging demand for rigs had enabled the company to build an order book worth $21.4 billion at the end of March for projects extending as far out as 2015.
``The market is very bullish, both on the onshore and the offshore sectors,`` V.K. Agarwal, who heads India `s Essar group`s rig business, said on May 17. ``People are not getting rigs.``
The company, which owns 14 rigs, leased a deepwater rig to Gujarat State Petroleum Corp. last month for about $340,000 a day.
Reliance is paying $320,000 a day until August 2008 to rent the Deepwater Frontier, more than twice the rate Transocean charged an earlier client, according to Transocean`s Web site. The tariff will rise to $477,000 a day, when Reliance extends the contract in 2008 for another three years.
Explorers in Norway , the North Sea, West Africa and the Gulf of Mexico have accelerated drilling plans and reduced costs at deep-sea ventures by sharing rigs, said Rig Management`s Gloppen.
Very Fast
`` India is very fast in offering acreages,`` said Ian Blakeley, a manager responsible for India at IHS Inc., an oil services provider. ``The operators are slower in exploration. ``
Gujarat State Petroleum, which said in 2005 that it made India `s biggest gas discovery with estimated reserves of 20 trillion cubic feet, has not met half of its drilling commitments after two extensions, the company`s partner in the field, Geoglobal Inc., said in its annual report.
The shortage of offshore services may delay production to ``later 2008`` at Reliance Industries` gas development in Krishna Godavari, Tristone Capital Ltd., an energy investment bank, said March 8 in a report about Canadian explorer Niko Resources Ltd., Reliance`s partner in the field.
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Investment in equity shares has its own risks. Sincere efforts have been made to present the right investment perspective.The information contained herein is based on analysis and up on sources that we consider reliable. I, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and I am not responsible for any loss incurred based upon it.& take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations given in this blog.
