Rig shortage, manpower crunch push E&P cos for 30 pc cost overrun

New Delhi, Sept 27 (UNI) Shortage of rigs and crunch of skilled personnel have made projects cost of oil exploration and production companies heavier by 30 per cent in last 3-4 years, an Assocham study said.

The study points out that the companies are facing shortages of drilling rigs by over 60 per cent and skilled personnel to an extent of 40 per cent, thus resulting into inordinate delays of their hydrocarbons discovery schedule.

Seventy per cent of India's petroleum, oil&lubricant (POL) requirements are met through imports which might go up to 90 per cent by 2010, warns the paper brought out by Assocham and Ernst&Young.

If the issues are not addressed urgently, the country's crude import will go up by 20 per cent.

Assocham President Venugopal N Dhoot said the rigs demand have risen globally in response to relatively high energy prices and Indian exploration and production companies are feeling the pinch of their acute shortages to the extent of over 60 per cent.

The severity of the situation can be gauged from the fact that the issue of non-availability of rigs in the market has even prompted the government to push back announcements of 7th round of new exploration and licensing policy (NELP) to November this year.

Exploration and production being the highly risky profession, good engineers, geologists and geophysics are always in demand, says the paper.

The paper says that availability of rigs should be created with government efforts and oil production companies be given free hand to order chartering of rigs from their manufacturers even without little intervention as one day operational costs for a rig works out to be nearly 1,40,000 dollars.

Similarly, the paper said cost escalation of petroleum projects could be curbed if the oil companies are not subjected multiple government approvals in due to their huge project costs which run into several thousand of crore.

UNI