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Nine oil hunt companies band together

The nine oil exploration and production companies plan to jointly hire rigs through a Norwegian service provider.

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NEW DELHI: With international oil prices nudging $70 a barrel once again, India's oil exploration companies are closing ranks to bring down the cost of hiring drilling rigs and speed up exploration efforts.

Nine companies - Reliance Industries, BG Exploration & Production, Hardy Exploration, Jubilant Oil & Gas, Niko Resources, Gujarat State Petroleum Corporation, Hindustan Oil Exploration, GAIL Ltd and Cairn Energy - have agreed to pool in their requirements and plan a joint strategy. The country's biggest oil producer, Oil & Natural Gas Corporation (ONGC), however, isn't on board.

The nine oil exploration and production companies plan to jointly hire rigs through a Norwegian service provider. "We want exploration companies to share rigs in a resource-scarce era through a long-term agreement," says India's director general of hydrocarbons VK Sibal, a key mover in this area.

Sibal's proposal has been declined by ONGC, since it is in a comfortable position as far as its own rig requirements are concerned. ONGC feels that since it is undertaking a large number of drilling programmes, it cannot spare any rig for the others. The company plans to drill about 300-350 wells this year.

"We had the foresight to hire our rigs at competitive rates," says a senior ONGC executive.

The company has about 70 drilling rigs working in onshore areas and another 30 offshore. Of the 30 offshore rigs, the company owns about 10 and has hired the remaining at lower rates.  Drilling rates for sophisticated deepwater rigs have gone up from about $2,00,000 a day to $400,000 in the last one-and-a-half years.

Hiring rigs rather than owning them is a preferred option for oil exploration companies, especially if a field has not yet been discovered.

According to an offshore rig industry website, it used to cost about one million barrels of oil to build a jackup rig in the early 1980s, but the same now costs about two million barrels.

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