Cochin Shipyard Ltd, India’s leading commercial shipbuilder, is in talks with Oil and Natural Gas Corporation (ONGC) for a potential $550 million contract. The deal would involve the construction of two offshore jack-up oil drilling rigs, which are set to replace some of ONGC’s aging rigs. This collaboration is poised to make a significant impact on India’s offshore energy sector, as both parties work toward enhancing the country’s drilling capabilities.
Strengthening the Deal: Cochin Shipyard’s MoU with Seatrium Letourneau
Cochin Shipyard, led by Madhu Nair, is further solidifying its position for this lucrative deal by entering into a memorandum of understanding (MoU) with Seatrium Letourneau USA, Inc. (SLET). This partnership aims to bring cutting-edge design and technology to the project, with SLET providing critical equipment and expertise for the jack-up rigs.
Seatrium Letourneau is a subsidiary of Seatrium Ltd, a Singapore-based energy solutions company that emerged after the acquisition of Keppel Offshore & Marine by Sembcorp Marine in 2023. The collaboration between Cochin Shipyard and Seatrium is seen as a strategic move to cater to the growing demand for Mobile Offshore Drilling Units (MODUs) in the Indian market.
ONGC’s Need for New Jack-Up Rigs
ONGC is seeking to modernize its offshore drilling fleet, which includes rigs that have been in operation for more than four decades. These old rigs are scheduled to be phased out in the next couple of years, and the company is looking for advanced, reliable, and efficient replacements. The proposed $550 million order is part of ONGC’s broader strategy to develop India’s offshore drilling capabilities while reducing dependency on foreign manufacturers.
The rigs will be built by domestic shipyards, allowing Indian shipbuilders to gain valuable experience and expertise in constructing sophisticated offshore rigs. This move is also aligned with the Indian government’s “Make in India” initiative, which encourages domestic manufacturing and boosts local industries.
Cochin Shipyard’s Expanding Product Portfolio
Cochin Shipyard is known for its diverse range of products, including cargo ships, passenger ships, dredgers, hybrid tugs, and defense vessels such as aircraft carriers and Anti-Submarine Warfare (ASW) Corvettes. The addition of offshore jack-up rigs to its portfolio would further enhance its capabilities in specialized shipbuilding. This would also provide the shipyard with a competitive edge in the growing offshore energy sector.
In a filing to the stock exchange, Cochin Shipyard highlighted its extensive experience in ship construction and engineering, coupled with Seatrium’s renowned technical expertise in offshore drilling rigs. This collaboration is set to make a significant impact on the Indian offshore energy industry, bringing together two industry leaders to meet the country’s growing energy needs.
Financial Incentives for Domestic Shipbuilders
One of the key factors driving this collaboration is the government’s shipbuilding financial assistance scheme, which has been in place to support local shipyards. The scheme is designed to offset the cost disadvantage faced by Indian shipbuilders, which ranges from 20% to 35% compared to their foreign counterparts.
Under this scheme, Indian shipyards can receive state aid of up to 14% for orders secured until March 2025. After that, the subsidy will be reduced to 11% in the final year of the scheme. For specialized vessels like MODUs or jack-up rigs, there is no upper limit on the subsidy, making this an attractive proposition for Cochin Shipyard and other domestic manufacturers.
The Future of India’s Offshore Energy Sector
The collaboration between Cochin Shipyard and Seatrium Letourneau USA is part of a broader effort to advance India’s offshore energy industry. The Government of India has prioritized the development of offshore oil and gas fields, and this partnership is expected to play a key role in ensuring the country’s energy security.
In addition, the Ministry of Ports, Shipping, and Waterways is drafting a new shipbuilding policy, which will further boost the sector. This policy aims to provide long-term visibility for shipyards, offering subsidies of up to 30% for building green vessels and ships with futuristic technology. With the scheme running through March 2034, and potentially extending until 2047, shipbuilders will have ample opportunities to secure high-value orders and invest in advanced technologies.
Conclusion
The potential $550 million order for two offshore jack-up oil drilling rigs represents a significant milestone for Cochin Shipyard and ONGC. By leveraging advanced designs from Seatrium Letourneau USA and the support of India’s shipbuilding financial assistance scheme, Cochin Shipyard is well-positioned to contribute to India’s offshore energy sector while simultaneously expanding its product offerings. As the offshore energy industry in India continues to grow, this partnership stands as a key example of how domestic shipyards can play a pivotal role in meeting the country’s energy needs.
Source:
Economic Times, Link to article
Also read : Cochin Shipyard and SLET’s Strategic Partnership to Enhance Jack-Up Rig Technology