ONGC explores drillship acquisition/JV for deepwater capacity under Samudra Manthan

ONGC is exploring acquiring deepwater drillships or forming a joint venture to secure dedicated offshore drilling capacity under Mission Samudra Manthan. The initiative aims to accelerate deepwater exploration, reduce reliance on foreign rigs and support India’s efforts to boost domestic oil and gas production

New Delhi: State-owned Oil and Natural Gas Corporation (ONGC) is exploring the acquisition of deepwater drillships or formation of a joint venture to secure dedicated drilling capacity as it steps up efforts to accelerate offshore exploration to find oil and gas reserves under its Mission Samudra Manthan programme.

ONGC has issued an Expression of Interest (EOI) to engage a specialist global offshore rig-broking consultant to identify potential drillship owners or counterparties, assess assets and valuations, and support the state explorer in negotiating a possible ownership or joint venture arrangement.

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The initiative is aimed at creating dedicated, priority-access deepwater drillship capacity, according to the EOI issued by ONGC.

“ONGC is undertaking a structured capacity-creation programme to secure dedicated, priority-access deepwater drillship capacity in support of Mission Samudra Manthan. In view of the same, ONGC is exploring possibilities of ownership or JV model for Drillship acquisition,” the EOI said.

The Union Cabinet had last month approved Samudra Manthan, the National Offshore Exploration Scheme, with an outlay of Rs 84,084 crore through 2030-31.

The central-sector scheme is aimed at accelerating exploration of India’s offshore oil and gas resources, particularly in deepwater and ultra-deepwater areas, as the government seeks to boost domestic production and reduce import dependence.

Under the scheme, the government will provide financial support of up to 50 per cent of the cost of deepwater exploration wells, subject to a cap of Rs 675 crore per well.

The programme includes drilling of 60 deepwater exploration wells, large-scale seismic surveys, development of common offshore production and evacuation infrastructure, and creation of an Oil and Gas Manufacturing and Services Zone.

To undertake such deepwater drilling, companies such as ONGC require specialised drillships. India currently does not have the manufacturing capability to build deepwater drillships, leaving explorers dependent on foreign-owned rigs typically secured through time-charter arrangements.

The proposed consultant will help ONGC identify suitable global drillship owners and contractors, undertake commercial benchmarking and technical due diligence, and assist in negotiating an ownership or JV deal.

The assignment has been structured in two phases. The first, expected to run for three months, will involve identifying, screening and shortlisting potential counterparties and establishing an indicative commercial basis for ONGC to decide whether and with whom to proceed.

The second phase, which would run for up to six months from commencement, would cover ownership or JV negotiation support, documentation, financing coordination and transaction closure, including bringing the rig into India.

The consultant’s mandate would include benchmarking drillship day rates and sale-and-purchase or JV valuations against recent global transactions, coordinating technical due diligence and leading negotiations for a non-binding indicative term sheet covering equity split, governance, charter economics and an indicative sail-in timeline, according to the tender document.

For the potential transaction, ONGC is also looking at structuring a GIFT City special purpose vehicle (SPV) and assessing an equity-debt funding mix, including an external commercial borrowing route, according to the EOI.

The EOI seeks market intelligence on drillship owners and contractors with deepwater assets or newbuild capacity, including their fleet specifications, financial standing and appetite for joint ventures.

ONGC has also asked potential advisers to provide details of global drillship and semi-submersible transactions handled over the past seven years.

ONGC has specifically sought experience in deepwater-capable floaters rated for water depths of 1,500 metres or more, highlighting their relevance to Mission Samudra Manthan.

The move comes as ONGC seeks to build greater control over deepwater drilling capacity rather than rely entirely on third-party rig availability, although the EOI does not specify the number, type or cost of drillships it may ultimately seek to acquire.