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Risk Analysis study for Krishna Godavari Basin Pipeline System: A report by Det Norske Veritas

July 25: In response to the recent gas fire in GAIL`s pipeline in Rajahmundry, Andhra Pradesh recently, the gas major had mandated a detailed risk analysis study to the Norway-based consultant Det Norske Veritas (DNV).
The website provides here for reference purposes, a copy of the report submitted by DNV on the "Risk Analysis study for Krishna Godavari Basin Pipeline System", under the following heads:
8Hazard identification and failure case scenarios in terms of isolatable sections, temperature, pressure, phase, diameter and mass inventory
8Frequency discussion in terms of isolatable section, pipeline length and frequencies per year
8Consequence assessment, in terms of description, accident scenario, release rate and duration, event, impact criteria and consequence distance
8Risk results in terms of individual and societal risks
8Failure case scenarios for Kondapalli zone
8Failure frequencies of the identified scenarios
8Consequence results for the Kondapalli zone
8Location specific individual risk for the pipeline in the Kondapalli zone
8Individual risk contours for Kondapalli zone pipeline
8Individual risk contours for Tadepalli to Kondapalli (Lanco) pipeline
8Individual risk contours for Kondapalli (Lanco) pipeline to BGL pipeline
8Individual risk contours for Lanco and BGL terminals
8Societal risk for Kondapalli zone pipeline
The website also carries here a copy of a complaint filed by a resident of West Godavari District, where the GAIL gas pipeline passes through, that the ROU has been encroached.
8Can these complaints be taken lightly any more?

News Briefs

July 25: 8Chambal Fertilizers: Gas allocation for May, 2014: The website provides here for reference purposes, details of gas allocation to Chambal Fertilizers and Chemicals Ltd. (CFCL) for the month of February, 2014, under the following heads:
 --Type of gases
 --Contracted quantity
 --Company-wise average gas supply for 2013-14
 --Company-wise current gas supply for May, 2014
8Assam Gas cracker project commissioning may be delayed unless immediate NBWL clearance granted: Oil India Ltd.'s (OIL's) Brahamaputra Cracker and Polimer Ltd. (BCPL), Assam requires urgent clearance from the National Board for Wild Life (NBWL), Ministry of Environment and Forests (MoEF) for commencement of its planned construction activities in Project-II as well as continue its construction activities in Project-I.
 --Immediate clearance is required for use of 305 hectares of non forest land falling within 10 kms from the boundary of Dibru-Saikhowa National Park and Borjan-Bherajan-Padumani wildlife sanctuaries
 --Notably, the project implementation was started only after obtaining necessary clearances from the MoEF as well as NBWL. Approval is now also required to continue construction activities as per the existing clearances, scrapping the move to consider the clearances already given.

News Briefs - II

July 25: 8EPC work of FPSO conversion at Keppel Shipyard, Singapore to be commissioned in November, 2014: EPC work of floating production, storage and offloading (FPSO) conversion at Keppel Shipyard, Singapore, is scheduled to be commissioned on November 15, 2014.
 --Notably, the contract has been awarded to SP Armada Oil Exploration Pvt. Limited in february, 2013 at a cost of $736.6 million for hiring period of 9 years.
8Pipavav Defence and Offshore's Sagar Laxmi modification project gets delayed to December, 2014: The Sagar Laxmi modification project, which was awarded to Pipavav Defence and Offshore Engineering Co. Ltd., Mumbai has got delayed to December, 2014.
 --The delay is primarily due to delay in handing o
ver of Sagar Laxmi to the contractor and delay in delivery of free issue item (GTG package) to the contractor.
 --Slow progress in engineering and procurement by the contractor has also contributed to the delay.
 --Notably, in comparison with the scheduled progress of 60.36%, the actual completion is only about 14%.

Outstanding inter-ministerial issues-I: Dharmendra Pradhan gets involved

July 25: Dharmendra Pradhan, the new petroleum minister has asked the ministry to put together a brief on all outstanding issues which require involvement of other ministries for resolutions.
The list of issues and the ministries and departments involved are outlined below:
Dependency on finance ministry to release the government share of under recovery contribution in a timely manner
8The petroleum ministry is dependant on the finance ministry to release the government cash compensation towards its under recovery contribution in a timely manner, to enable companies to finalize their annual accounts within SEBI stipulated timelines.
8Notably, oil marketing companies (OMCs0 incur under recovery for sale of sensitive petroleum products at controlled prices, and this burden is shared between upstream companies, central government and the OMCs.
Clearances from the shipping ministry to bring in oil cargo on CIF basis
8Interactions are required with the shipping ministry on a regular basis for OMCs to get clearances on their cargo imports on a CIF basis.
8OMCs import crude oil into the country against long term contracts as well as spot basis from abroad.
8As per shipping ministry guidelines, Indian flag vessels need to be given priority and the shipment brought in on an FOB basis.
8However, the OMCs need to interact with the shipping ministry on a case by case basis to get cargo in on a CIF basis.
Interactions with MNRE constituted working group for determination of benchmark price of Jatropha seeds and bio diesel
8With reference to bio diesel purchase policy announced by the ministry in 2005, the ministry of new and renewable energy (MNRE) has constituted a working group for determination of benchmark price of Jatropha seeds and biodiesel.
8While the working group wants to go ahead with facilitating the sale of bio diesel by the private manufacturers to the bulk consumers of diesel, the proposal cannot go through without the petroleum ministry's intervention.
8Pricing issues of bio-diesel and permission to sale to bulk consumers will require consent of the petroleum ministry as marketing control orders and marketing guidelines have been issued by the ministry with approval of CCEA.

Outstanding inter-ministerial issues-II: Minister seeks details

July 25: Refinery Branch
Transfer of work related to petroleum rules from PESO to OISD to be given go ahead by DIPP
8Report on transfer of work related to petroleum rules from Petroleum and Explosive Safety Organization (PESO) to Oil Industry Safety Directorate is pending review by the Department of Industrial Policy and Promotion (DIPP).
8In fact, it is DIPP who had suggested this transfer of work, post which the ministry had engaged Deloitte Touche Tohamatsu India Pvt. Ltd. (DTTIP) to carry out the organizational development study for assessment of manpower and infrastructure requirement.
8However, now that the report has been ready, despite many reminders, DIPP has not been available for consultation to enable closure of the project.
Proposal to constitute PNGISB as a single authority to regulate safety in the petroleum sector pending clearance by DIPP and labour ministry
8The proposal to constitute a single authority, that is, Petroleum and Natural Gas Industry Safety Board (PNGISB) to regulate safety in petroleum and natural gas industry in India is pending due to departments like labour ministry and the Department of Industrial Policy and Promotion opposing the issue.
8This proposal had been mooted to do away with the multiple statutory and administrative authorities operating simultaneously in framing safety regulations and implementation, which has made the task of ensuring and implementing safety standards a very complex and difficult task.
8Although some of the 8 departments who have been consulted in this matter seem to be opposed, the ministry is of the view that there is a need to convince them and go ahead with this proposal.

Outstanding inter-ministerial issues-III: More details

July 25: Concurrence of various ministries required for implementation of the Auto Fuel Vision and Policy 2025
8Implementation of the Auto Fuel Vision and Policy 2025 is pending concurrence of other concerned ministries and departments like the finance ministry, ministry of environment and forests, ministry of road transport and highways, ministry of heavy industries, ministry of health and family welfare, etc.
8An expert committee constituted by the ministry has recommended a roadmap for auto fuel policy till 2025, with the objective of making the smooth transition to the higher standard of fuels.
8The committee has also given a road map for rollout of BS-IV and BS-V in the country.
8However, implementation of the committee recommendations can only be done post go ahead from all these ministries and departments.
Pipeline project from Chennai Port to CPCL's Chennai refinery awaiting clearance by ministry of surface transport
8The laying of 42 inch crude pipeline for transporting crude oil and other petroleum products from Chennai Port to Chennai Petroleum Corporation Ltd's (CPCL's) refinery at Manali, Chennai is awaiting clearance by ministry of surface transport.
8A problem related to realignment of pipeline in fisherman area requires CPCL to lay the pipeline below the service road of the Chennai-Ennore port Connectivity Road Project without any modifications, for which clearance from ministry of surface transport is sought.
8Notably, 7 out of 8 clearances have already been received from various authorities, and this one clearance is now required to go ahead with the project.

Gujarat Blocks: Exploration activities affected due to statutory and government clearance issues

July 25: Exploration activities in various pre-NELP and NELP blocks awarded in Gujarat and Rajasthan under the PSC regime have often been affected due to non availability of statutory and other clearances from different agencies.
8This has been so, despite that fact that blocks have been awarded after obtaining in-principle clearances from various statutory central and state agencies.
Details of issues faced by various Gujarat blocks is outlined below:
ONGC operated CB-ONN-2005/10 block faces issues of expansion in GIDC areas
8ONGC operated CB-ONN-2005/10 block faces issues of expansion in GIDC areas, as already anticipated earlier this year.
8The operator had already submitted that some part of area of the block falls under third and fourth phase of development plan of GIDC in south of Vagra Taluka, which meant that in the event of ONGC moving to Phase-II, some wells may fall in the GIDC or proposed GIDC areas, affecting the exploration activities in the block.
8This in turn may lead to non-adherence and deviation of minimum work program (MWP) as per PSC terms.
8Further, post completing Phase-I of the block, the JV partner on the block - Gujarat State Petroleum Corporation (GSPC) has stated its disinterest in entering into Phase-II, and the current operator ONGC is planning to enter the Phase-II on sole risk.
Boundary issues impede work in exploration blocks CB-ONN-2005/11 and CB-ONN-2010/9
8CB-ONN-2005/11 Block: Quest Petroleum, the operator on the block, as well as all the other consortium partners Quippo, SERI INFRA, Primera and Vectra have sought termination of the contract since 33.13 of the block falls under the municipal limits and PEL for that portion has not been granted.
8The block area was 257, but the Gujarat government has granted PEL for only 223.87 as the rest of the area falls under municipal limits.
8The consortium has asked for termination of contract and reimbursement of costs incurred by them on the block.
8CB-ONN-2010/9 Block: The operator on the block, ONGC, has been granted PEL for only 109.36 against PSC area of 120 due to boundary issues with Sanand and Bavla Municipalities of Ahmedabad district.
8Notably, an area of 10.64 falling closer to the eastern and southern boundary of this block fall within the limits of Ahmedabad Municipality district.
8Accordingly, ONGC has now proposed modification in original minimum work programme of initial exploration period in the block.
PEL extension issues in exploration block GK-ON/4
8The exploration block GK-ON/4, which was awarded to Focus Energy Ltd. as  operator, and ONGC as Licensee under the pre-NELP bidding round faces PEL extension issues with the Gujarat government.
8Notably, although the PEL extension for the period August 25, 2011 to August 6, 2014 has been approved by the petroleum ministry, the same is not getting regularized by the Gujarat government.

Rajasthan Blocks: Exploration activities affected due to statutory and government clearance issues

July 25: Details of issues faced by various Rajasthan blocks is outlined below:
Issues due to clearance by the defence ministry
8Block RJ-ONN-2005/1: The HOEC operated block, with BPRL and IMC as consortium partners is awaiting clearance from the defence ministry for pre-drillign and drilling activities in the block.
8Although communication has been on between the parties, the defence ministry is yet to provide this specific clearance.
8Block RJ-ONN-2005/2: The Oil India Limited (OIL) operated block, with HOEC, HPCL and Mittal Energy as consortium partners under teh NELP-VII bidding round are awaiting clearance from the defence ministry for establishment of temporary camps and carry out drilling and other oil and gas related activities in the block.
8Block RJ-ON/6: Again, the Focus Energy Ltd. operated  pre-NELP block, with ISIL and NOCL as consortium partners and ONGC as Licensee is awaiting communication from the defence ministry regarding the information provided to them about the area proposed to be surrendered in the block for setting up army manoeuvre range in the area.
Issues related to clearances by the ministry of environment and forest in Block RJ-ONN-2003/2
8The Focus Energy operated NELP-V block, with BIL and XOIL as consortium partners are facing delays due to pending response from the ministry of environment and forests (MoEF).
8The operator has requested the MoEF for clarity on permission for drilling of exploratory wells in Desert National Park (DNP), Rajasthan area on completion of study on impact of 3D seismic survey on flora and fauna in the DNP.
Pending PEL grant in exploration block RJ-ONN-2010/2
8The NELP-IX block RJ-ONN-2010/2, PSC of which was signed in March, 2012 is facing issues due to pending PEL grant by the state government.
8The block is operated by Focus Energy Ltd. with BIL as consortium partner.

Cost estimate of a dry well-I: RIL willing to pay only $6 million for KG-DWN-2004/4 well under unfinished MWP, ministry asks for $20 million

July 25: A potential showdown is brewing between the petroleum ministry and RIL over the cost of the unfinished work in RIL`s deepwater block KG-DWN-2004/4.
8While the petroleum ministry has pegged the cost of the unfinished work in the block at a massive $20.19 million, RIL is willing to pay only $6 million.
8The block has already been proposed for relinquishment by RIL because of poor prospectivity but this has not been okayed because of the unpaid cost of unfinished work.
8RIL decided to relinquish the block without completing one exploratory well.
8The operator has already paid the $6 million which it feels is the actual unfinished cost in the block.
8The DGH has made it clear that it is willing to clear the relinquishment request, provided RIL pays up $20.19 million, along with interest, as the cost of the unfinished MWP.
8As RIL has already paid $6 million as the cost of the unfinished MWP on its own, the DGH wants it to shell out the balance amount to walk out of the block.
8The block KG-DWN-2004/4 is one of the 21 NELP blocks where RIL (operator) had assigned a 30% stake to British energy giant BP.
Click here for more information

Cost estimate of a dry well-II: How DGH arrived at the $20 million figure?

July 25: The DGH has estimated the cost of the undrilled well in RIL's deepwater block KG-DWN-2004/4 at a massive $20.19 million based on the actual cost incurred in a similar well in the neighbouring block KG-DWN-2002/1, which is operated by ONGC.
8The ONGC well (well depth 5,102 metres) was drilled by the rig Platinum Explorer in 2012-13, the hiring cost of which was pegged at $20.87 million.
8The well -- dubbed NAD5A -- took 34 days to be drilled by ONGC, at a total cost of $35.48 million.
8While the cost of materials and services were pegged at $1.4 million and $3.67 million, respectively, the OSV logistical cost worked out to $1.38 million.
8The cost of casings, bits, x-mas tree, water, lubes, insurance and other ancillary services added up to another $10.56 million.
8As per DGH's calculation, the undrilled exploratory well (depth 2,500 metres) in the block KG-DWN-2004/4 would have taken 19.35 days to be drilled.
8Thus the cost of unfinished well have been taken as $35.48 million/34 days x 19.35 days which works out to $20.19 million.
Click here for more information

Cost estimate of a dry well-III: Is RIL buying time expectiing some changes in the policy?

July 25: RIL, it seems, has fixed the cost of the undrilled well in its deepwater block KG-DWN-2004/4 at a lump sum $6 million keeping in mind the former DGH RN Choubey`s suggestion that for calculation of unfinished minimum work programmes, the costs should be uniformly fixed in line with the standard rates prescribed in NELP-VIII and IX contracts for cost of unmet work programmes.
8Though this framework has not yet been agreed at, RIL is heavily banking on the approval of this policy so that it does not have to pay $20.19 million to walk off the block.
The pre-determined figures of Liquidated Damages in NELP-VIII and NELP-IX contracts have been prescribed as under:
--Per well: $1 million; per sq km 3D: $5,000; per line KM of 2D: $2,500
8Shallow water
--Per well: $3 million; per sq km 3D: $1,500; per line KM of 2D: $1,000
--Per well: $6 million; per sq km 3D: $1,500; per line KM of 2D: $1,000
8However, there is a twist in this.
Choubey had said that this policy, if approved, should be for "future" calculations and not for "past" calculations.
8So, in any case even if the policy is approved, it will not apply for the RIL block.
Click here for more information

Rs 10,000 crore loss on royalty and state taxes: Assam demands implementation of Supreme Court order on Gujarat

July 25: Taking a cue from Gujarat, the Assam Chief Minister Tarun Gogoi has also sought royalty, VAT and other state taxes at pre-discounted price of crude oil with effect from February 1, 2014 as ordered by the Supreme Court.
8Companies like ONGC and OIL, since April 2008, have been paying royalty to state governments, whether it is Assam or Gujarat, at the post-discount sale price, in line with royalty payments to the central government.
8This, the Assam CM has argued, had caused immense losses to the exchequer as the extent of discount has at times been as high as 90% or more resulting in cumulative loss of revenue to the tune of Rs 10,000 crore in case of Assam since 2008-09.
8Gogoi has further pointed out that ONGC and OIL are liable to pay royalty on crude oil at 20% of the well-head price, in addition to VAT at 5% and other state taxes. As the petroleum ministry has been allowing ONGC and OIL to supply crude to the OMCs at highly discounted rates, these companies have been paying royalty to the state on the basis of the discounted sale price.
8Keeping in mind the Gujarat High Court order that the royalty on crude oil has to be paid on the pre-discount price of crude oil, the Assam government too has sought a similar dispensation from the central government.
8The Gujarat High Court order was taken to the Supreme Court for review by ONGC where the apex court gave an interim order to maintain the status quo.
8Accordingly, Gogoi has sought the Prime Minister's intervention in
giving appropriate instructions to ONGC and OIL to pay royalty, VAT and other state taxes at pre-discounted price of crude oil as ordered by the Supreme Court.(Click on Details for more information)

Second expedition planned in search of gas hydrates-I: Japan Drilling Company's vessel stands better chance of getting hired at cost of Rs 619 crore

July 25: ONGC, which has been entrusted the responsibility for execution of the second phase of the core sample gathering expedition -- dubbed National Gas Hydrate Programme Expedition-02 (also called NGHP-02) -- has obtained budgetary estimates from Siem Offshore (Overseas Drilling Ltd) and Japan Drilling Company Ltd (JDC) for hiring of rigs and attendant services for execution of the programme.
8While Siem has submitted a budgetary quote of $79.41 million (equivalent to Rs 492 crore) for the drillship -- dubbed Joides Resolution -- with services, JDC has quoted $96.63 million (or Rs 619 crore) for the rig -- dubbed Chikyu -- along with services.
8The considerable difference in the quotes of the two drillships was deliberated in the technical meeting of the NGHP where ONGC explained that the reasons behind the high cost of hiring the vessel Chikyu.
8The E&P major pointed out that the drillship Chikyu is much more technological advanced then the vessel Joides and is also readily available. The other vessel, Joides Resolution, might not be be available immediately or in continuity for the entire NGHP Expedition-02, ONGC informed.
8Going by the discussions that took place in the technical meeting, Japan Drilling Company's drillship, Chikyu, stands a better chance of getting hired.
8ONGC informed that all efforts are being put in to ensure that the second phase of the programme gets completed before March 2015.
(Click on Details for more information)

Second expedition planned in search of gas hydrates-II: About 20,000 TCM of gas is estimated to be entrapped in gas hydrates

July 25: Natural gas hydrates are clathrates of natural gases (mainly methane) which are captured in water ice crystals. These clathrated compounds have been discovered in sediments worldwide wherever low temperature, high pressures and sediment organic concentrations are conducive to their formation.
8As per the global estimates, about 20,000 TCM of natural gas is considered to be entrapped in the natural gas hydrates. Due to this vast energy resource potential of gas hydrates, many countries such as USA, Canada, Japan, India, Korea, China and Taiwan have undertaken National Gas Hydrate Programs for dedicated research.
8Globally, gas hydrates are under research and development stage and are likely to be commercialized in the near future. Indian National Gas Hydrate Program is mandated to explore the potential of gas hydrates in Indian Offshore areas. ONGC has been mandated by the the petroleum ministry to execute the second edition of the gas hydrates programme (NGHP-02).
8The NGHP Expedition-02 will be carried out at 20 deepwater locations in KG and Mahanadi offshore areas with water depths in the range from 1500 m to 3000 m. The well depths will be about 200 to 500 meters below seafloor.
8Suitable (Dynamically Positioned) DP vessels, along with the necessary equipment and experienced crew, specialized tools and integrated services, will be hired for execution of the programme.
8The programme is estimated to be completed in about 150 days. The logging-while-drilling and measurement-while-drilling (LWD/MWD) phase will be for about 64 days, while coring, drilling, wireline logging and formation testing phase will be for about 75 days. Intra-site movement and port calls are estimated to last for about 11 days.
8As per the current plan, the second phase of the programme will get completed before March 31, 2015.
(Click on Details for more information)

OPaL's petrochemical project in trouble-I: Project cost shoots up over Rs 27,000

July 25: The cost of the OPaL petrochemical plant coming up at Dahej has shot up from the originally approved Rs 21,396 crore to Rs 27,122 crore.
8This has put a question mark over the viability of the project.
8The project was initially approved at a cost of Rs 15,870 crore in December 2008, but later, with the addition of some units, the project cost went up to Rs 19,535 crore in June 2010.
8In August 2012, with the addition of the captive power plant (CPP), the project cost again shot up to Rs 21,396 crore.
8Compared to the earlier approved cost of Rs 21,396 crore, the project has seen a total cost escalation of Rs 5,680 crore.
8The highest cost escalation is on account of interest during construction, along with margin money and other preliminary expenses (project debt) which is pegged at Rs 2,483 crore. Interest during construction (due to quasi debt) has been estimated at Rs 709 crore.
8Then again, startup and commissioning expenses have gone up by Rs 1,592 crore. Also, change orders worth Rs 482 crore have been issued. Lastly, foreign exchange losses to the tune of Rs 460 crore have also resulted in higher project cost.
8The cost has been reworked by SBI Caps based on inputs from the project management consultant, EIL. The OPaL Board is yet to approve the revised cost.
8Along with the cost, the commercial operation date (COD) of the project has now been pushed back by about a year to February 2015.
8However, going by the present progress, the project is not likely to be completed before July 2015.
(Click on Details for more information)

OPaL's petrochemical project in trouble-II: More details

July 25: The website carries here, for reference purposes, the following details relating to the OPaL`s Rs 27,122 crore petrochemical plant:
8A background of the project
8Unit-wise physical progress (in percentage terms) of the project as of June 15, 2014.
8Current status of each unit
8Status of project utilities, such as availability of raw water, power for pre-commissioning and supply of fuel gas.
8Project`s marketing strategy (both international and domestic)
8Financial status of the project
8Expenditure as on June 15, 2014
8Equity subscription
8Zonal marketing offices and product warehouses

(Click on Details for more information)


Tender Briefs

July 25: 8OIL floats tender for charter-hire of 1400 HP rig for three years in Assam: OIL has floated a tender for charter-hire of one 1400 HP capacity (minimum) drilling rig for a period of three years.
--The company will deploy the rig in its Assam area.
--The tender documents can be procured before September 2, 2014
--The bid closing date and time is September 9, 2014 (11.00 hrs)

Click here
for more information
8More tenders: Some more tenders floated by oil and gas companies are:
--Repair and maintenance of mechanical jobs at Mathura Refinery [IOC] Details
--Laying of underground pipelines [ONGC] Details
--Maintenance work during planned shutdown of Uran plant [ONGC] Details
--Operation and maintenance of Jasidih POL terminal, Bihar [IOC] Details
--DCU, CGOT, LPG treater and coke dispatch facility (EPCC package) Haldia refinery [IOC] Details

TAPI pipeline: France's Total expresses interest in becoming the consortium leader

July 24: French Multinational Total S.A. has expressed its interest in becoming the consortium leader for the cross-country Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline project.
8Accordingly, the Steering Committee (SC) has advised the Asian Development Bank (ADB), which has been appointed as the Transaction Advisor for the project, to commence discussions with Total with regard to becoming the consortium leader.
8The Turkmen side is supposed to provide a list of prospective consortium leaders. However, as of now, it has provided the name of only one company, that is, Total, which has expressed its interest in becoming the consortium leader for the project, provided a mutually agreeable investment arrangement is reached within the framework of the Turkmenistan law.
8The candidature of Total was discussed during the 8th Steering Committee (SC) Meeting which was held in July, 2014 in Ashgabat to review the current status of the project and chalk out further course of action for taking the project forward.
8Along with Total, the Turkmen side is also interested in bringing on board three more companies involved in the country`s offshore upstream industry as consortium members. A decision on this however has not yet been reached.
8Pertinently, a consoritum leader is only expected to be interested in the construction of the pipeline if it is concurrently given rights to the lucrative upstream blocks in the hands of Turkmenistan.
8In the meantime, the the incorporation of TAPI Limited, the SPV which will be responsible for laying of the cross-country pipeline, has got further delayed.
8The SPV is now likely to be incorporated by September 2014. The consortium leader will be finalized only after the incorporation of TAPI Limited.
(Click on Details for more information)

Charter-hire of platform mounted modular rig-I: ONGC grants 170-day extension to Sundowner Offshore on nomination basis

July 24: ONGC has extended its contract for charter-hire of a platform mounted modular rig -- dubbed P-16 -- signed with Sundowner Offshore International (Bermuda) Ltd. on a nomination basis.
8The contract had to be extended as the work programme for which it was hired could not be completed by the last date of the contract. As per the ONGC's drilling programme, sidetracking and drilling of two wells each is yet to be completed in the Mumbai High South (MHS) field.
8The contract has been extended for a period of 170 days, or till the work is completed, whichever is earlier. In case, there is some work left on the 170th day, the well-in-progress will have to be completed by the contractor.
8The total financial implication of the extended contract works out to Rs 11.77 crore, which includes the Indian Agent's Commission (IAC) of 1.5% on the net amount (excluding reimbursable, mobilization, demobilization and insurance proceeds) payable to Aksara Enterprise.
8Demobilization fee shall not be paid against the original contract and will be paid as part of the extended contract.
8The original contract for charter-hire of the rig was awarded to Sundowner for a firm period of 1000 days, which expired on May 2, 2014. The contract expiry date, however, will be taken as the day on which the rig is de-hired after completion of the well-in-progress.
(Click on Details for more information)Enter Introduction Here

Charter-hire of platform mounted modular rig-II: Costing details

July 24: ONGC was successful in extracting a discount of 3.29% from Sundowner as compared to the rates quoted in the original contract. The costing details (excluding service tax) at which the contract has been extended are as under:
8Mobilization fee: Nil (as per original contract it is $1.5 million)
8Operating day rate (ODR): $58,700 ($60,800)
8Non-operating day rate (NODR):
$55,765 ($57,760)
Equipment break-down rate (EBDR): Nil (Nil)
8De-mobilization fee:
$0.50 million ($0.5 million quoted in the original contract will not be charged)
(Click on Details for more information)




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