‘India a bright spot in the gloomy global energy industry’

'India a bright spot in the gloomy global energy industry'SINGAPORE: India is a bright spot in the gloomy global energy industry with oil giant ONGC taking a lead in upstream activities amidst the depressed oil price environment which has forced others to cut costs and review or shelve projects.

As a market, the Indian energy demand growth is driven by the strong economic performances and the increasing middle class spending while state-run Oil and Natural Gas Corporation (ONGC) has taken a lead in calling tenders for chartering of offshore drilling rigs and support vessels of upstream projects, noted Jon Fredrick Muller, senior project manager at the Oslo-based Rystad Energy AS.

“This makes India a bright spot for the industry,” he told PTI at the Singapore Offshore Finance Forum, organized by MarineMoneyOffshore and ABN AMRO on Thursday.

Delegates at the one-day forum noted the significant increase in ONGC’s latest budget while national oil companies in other countries have announced cuts in upstream spending and are reviewing field developments, albeit putting some on hold.

ONGC has budgeted Rs 362,490 million for 2015-16, up from Rs 299,975 million in 2014-15.

“ONGC has not cut down Exploration & Production spending like most other national oil companies have done so. They have kept their demand up, they have needs for their deep-water drilling equipment – floaters and jack-ups for shallow water, as well as Offshore Support Vessels,” said Geir Sjurseth, managing director, global head for offshore finance at DVB Bank SE.

“They (ONGC) are issuing tenders which have attracted both national and international companies that would like to supply their equipment, as longer term employment opportunities in other markets are difficult,” he said.

The above means that ONGC are enjoying very attractive rates because rates have come down significantly because of the many international bidders of these tenders for rigs and services for exploration and production activities,” said Sjurseth.

He estimates rates for chartering and leasing rigs have dropped by 30-40 per cent over the past year and close to 50 per cent over the past 18 months.

“ONGC have charter/hired offshore rigs and vessels at 30-40 per cent lower rates than previous contracts,” said Manav Kumar, president and director of Singapore-based Dynamic Drilling Holdco Pte Ltd.

With cost of services, rigs, oil field material, platforms and new constructions being very low, ONGC must utilize this opportunity to boost capital expenditure activities to raise production and reserve appreciation in the future, the delegates pointed out. –PTI

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