ONGC upgrades rig hired from Reliance Industries at own cost
State-owned Oil and Natural Gas Corp (ONGC) has upgraded at its own cost an ultra deep-sea drilling rig it had hired from Reliance Industries and will return the upgraded rig to the Mukesh Ambani firm at July end.
ONGC had in July 2009 hired the rig Dhirubhai Deepwater KG-1 (earlier christened Deepwater Pacific-1) for four years at close to Rs 3,915 crore.
Sources said the rig was hired on assignment basis from RIL for drilling in 10,000 feet water depth but is capable of being upgraded to 12,000 feet.
Since ONGC wanted to drill three wells in water depth ranging from 10,170 to 11,318 feet, it decided to upgrade the rig at its own cost.
The upgradation cost USD 551,150, they said adding ONGC will turn back the upgraded rig to RIL on July 30 after completion of the four year period.
ONGC reasoned upgrading the rig at its own cost on the ground that it would had to pay liquidated damages if these were were not drilled on time and there was no available rig to carry out the drilling commitment it made when it won the blocks KG-DWN-2004/1, KG-DWN-2004/6, CY-PR-2004/1 and CY-DWN-2004/3 in New Exploration Licensing Policy (NELP) rounds.
This is one of the rare occasions that ONGC had decided to take the cost of the upgrade on itself.
Sources said company has also argued that it does not need to hire a drilling rig with a higher capacity.
Last year, the Comptroller and Auditor General of India (CAG) had pulled up ONGC for hiring the
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