OREANDA-NEWS. May 05, 2011. ONGC has finalized plans to purchase six on-land drilling rigs from BHEL at a total cost of Rs 795.72 crores. Orders for another four rigs are under vetting and are likely to be awarded to BHEL, taking the total cost up to Rs 1210.6 Crores.  8The acquisition proposal consists of six what are termed "Type III" on-land drillings rigs. The new rigs are of AC-VFD (variable frequency drilling) type instead of the conventional AC-SCR type which are currently under use. A proposal for buying four mobile drilling rigs, again from BHEL, is under consideration. The rigs are to be deployed in Ankleshwar, Rajahmundry, Assam, Ahmedabad and Mehsana assets where 10 old rigs are to be replaced.

The price of the 6 Type-III rigs, which will cumulatively cost Rs 795.72 crores, has been arrived at after three rounds of deliberations with BHEL as the initial quotation was much beyond ONGC's budget estimate. ONGC also solicited quotations from international rig manufacturers from China and USA, but the final estimates of  BHEL turned out to be most reasonable, considering other advantages. The price for the four mobile rigs is yet to be fully negotiated but the total tag, for all 10 rigs, is pegged at around Rs 1210 crore.

A cost-benefit analysiswas done after ONGC's apex Executive Purchase Committee (EPC) questioned the feasibility of acquiring new rigs as hired rigs are meant to be more efficient. The decision finally swung in favour of BHEL.