ONGC explores drillship buy for Samudra

State-owned Oil and Natural Gas Corporation (ONGC) is exploring the acquisition of deepwater drillships or the formation of a joint venture. This move aims to secure dedicated drilling capacity for its accelerated offshore exploration under the Mission Samudra Manthan programme, according to an Expression of Interest (EOI) issued by the company.

ONGC has issued the EOI to engage a specialist global offshore rig-broking consultant. The consultant's role will be to identify potential drillship owners, assess assets and valuations, and support ONGC in negotiating a possible ownership or joint venture arrangement.

The initiative is designed to create dedicated, priority-access deepwater drillship capacity. "ONGC is undertaking a structured capacity-creation programme to secure dedicated, priority-access deepwater drillship capacity in support of Mission Samudra Manthan," the EOI stated.

The Samudra Manthan Scheme

The Union Cabinet approved the National Offshore Exploration Scheme, called Samudra Manthan, last month. The scheme has an outlay of ₹84,084 crore through the 2030-31 financial year.

This central-sector scheme aims to accelerate exploration of India's offshore oil and gas resources, particularly in deepwater and ultra-deepwater areas. The government seeks to boost domestic production and reduce import dependence.

Under Samudra Manthan, the government will provide financial support of up to 50 per cent of the cost of deepwater exploration wells. This support is subject to a cap of ₹675 crore per well.

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

The Consultant's Role

To undertake deepwater drilling, companies like ONGC require specialised drillships. India currently lacks the manufacturing capability to build them, leaving explorers dependent on foreign-owned rigs secured through time-charter arrangements.

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

The assignment is structured in two phases. The first phase, expected to last three months, involves identifying, screening, and shortlisting potential counterparties. It will also establish an indicative commercial basis for ONGC to decide whether and with whom to proceed.

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

The consultant's mandate includes benchmarking drillship day rates and sale-and-purchase or JV valuations against recent global transactions. It also involves 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.

Transaction Structure and Requirements

For the potential transaction, ONGC is also looking at structuring a GIFT City special purpose vehicle (SPV). It is assessing an equity-debt funding mix, which may include an external commercial borrowing route.

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

ONGC has asked potential advisers to provide details of global drillship and semi-submersible transactions handled over the past seven years. The company has specifically sought experience in deepwater-capable floaters rated for water depths of 1,500 metres or more, highlighting their relevance to the mission.

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