With the rental differential between old and new rigs disappearing, Oil and Natural Gas Corporation (ONGC) has an opportunity to improve efficiency and make the most of rising crude oil prices by modernising its rigs.
It is also a time when activity in the oil exploration and production business is subdued, due to output cuts by the Organization of The Petroleum Exporting Countries. Good quality rigs would be available at discounts. Four years earlier, when crude oil was $100 a barrel, rentals were $85,000 a day for old rigs and $119,000 a day for new ones. The latter are now $27,000 a day; old rigs are quoting at $30,000 a day. “This is the right time for ONGC to opt for newer and efficient rigs. Making better profit only on the basis of higher oil prices is not enough. Cost efficiency and lower cost of wells is more important.
Globally, many oil producers are banning rigs above the age of 35 years,” said an industry expert. Read More…
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