ONGC recently cancelled a high-profile tender for chartering four jack-up rigs on five-year terms, citing unexpectedly high dayrates and concerns over potential collusive practices. The state-owned Indian oil giant explained that the pricing observed during evaluation showed a steep escalation of approximately 60%—from $35,606 to $56,195 per day—within nine months, which it deemed unreasonable and beyond competitive market behavior. This led to the decision to scrap the tender, leaving many drilling contractors frustrated with the bid process.

Reasons for Cancellation

ONGC clarified that the unusual pricing levels and bid patterns raised legitimate concerns about possible collusive practices. As a responsible public procurer, the company felt duty-bound to examine these concerns, prioritizing the safeguarding of organizational interests, prudent use of public funds, and integrity of the procurement process. The decision was based entirely on pricing reasonableness, competitive integrity, and alignment with established procurement norms, without any extraneous influence.

Tender Background

The international tender, launched last year, sought to charter four cantilever-type jack-ups of MLT or BMC design, capable of operating in water depths up to 300 feet. Several drilling players emerged as potential frontrunners in February, but ONGC cancelled the process as it aimed to secure five-year rig deals at relatively lower costs. Notably, a previous tender last year saw domestic player Greatship offer the lowest operating dayrate of $35,587 for its jack-up Greatdrill Chitra.

Industry Reaction

Industry sources described ONGC’s jack-up rig tenders as a "complicated bidding" exercise, noting that the company has cancelled several rig tenders in recent years to secure lower-priced deals. One source expressed frustration that the tender was cancelled while it was moving closer to an award.

New Tender Issued

Days after the cancellation, ONGC launched a new jack-up tender requiring two or more specialized rigs on three-year charter terms. The new exercise seeks cantilever-type, self-elevating, independent leg jack-ups capable of year-round operation offshore India's west and east coasts. Bids are due on 4 May, and while ONGC is seeking at least two rigs, it may hire additional ones if pricing is attractive. ONGC no longer follows the lowest bidder model, instead evaluating contenders based on technical and commercial parameters, with pricing still playing a key role.