Essar ties up funds for two ABG rigs

Essar Oilfields Services, a subsidiary of Essar Shipping Ports and Logistics, has achieved financial closure for its two jack-up rigs order with ABG Shipyard.

The company had placed the order in 2008 and has achieved closure for the deal in December last year, mobilising Rs 1,210 crore through a consortium of banks led by IDBI.

V Ashok, director, Essar Shipping Ports and Logistics, said the debt-to-equity ratio was at 1:1.

“The deal was closed on December 31, a time when the jack-up market had bottomed out, and it needed some convincing to get the money from the banks,” Ashok said.

He said the rigs would be delivered in 2011, one in June and the other in October.

Ashok said deliveries would happen at a time when there would be tenders from ONGC for seven jack-up rigs, and demand from other Indian companies as well.

The rigs are high specification ones with a drilling depth up to 350 metres. The company is looking at using these rigs in all markets.

“At the moment, nothing has  fructified, but we are in talks with companies in Russia and Norway to name a few. We will lock in something by the third-fourth quarter of the next financial year,” Ashok said.

On the offshore side, though there will be a net 15% additional supply, fuelling oversupply worries, Ashok said momentum in exploration and production activities in the deep- and mid-water segment is likely to be maintained on account of oil prices holding up at $80 per barrel,.

“Also, with Aban [Offshore] cracking a good deal in Iran, fetching day rates of $180,000, is a good sign for us,” he said.