Shirish Nadkarni
OGJ Correspondent
MUMBAI, Apr. 14 -- Two Indian industrial conglomerates plan to begin manufacturing deepwater drilling rigs to relieve the global shortage of such units.
The companies are Larsen & Toubro Ltd., India's largest engineering and construction conglomerate, and Reliance Industries Ltd., India's largest private sector conglomerate. Reliance earlier was forced to seek a 3-year drilling holiday in the exploration of nine deepwater blocks due to a lack of rigs.
The companies mean to capitalize on the surge of oil and gas producers getting into deepwater exploration, requiring rigs capable of operating in more than 350 ft of water. Ultradeepwater rigs capable of working in water to depths of 1,000 ft and more are in particular short supply. Reliance Industries is looking for a partner to manufacture rigs.
"We would like to get into this business with an experienced partner, and are scouting around for suitable companies. But we are serious about this venture, and would like to get it operational by the beginning of the next financial year, at the very latest," said Atul Chandra, Reliance president of petroleum international business.
Some of the rigs to be produced would be used in-house, but Reliance also plans to supply international demand.
The company also wants to invest $2.5 billion in a petrocoke gasification venture. It is looking to replace expensive naphtha with petrocoke as feedstock for its captive power plants in Jamnagar, on the Gujarat coast. The plants currently yield 500 Mw, but the company has plans to increase the output to 850 Mw.
"At present, the fuel for captive plants is sourced from crude oil. With the surge in the global price of crude, we would prefer to make fuel by gasification of petrocoke," Partha Mitra, Reliance's president, planning and business development, told AOGM.
Meanwhile, L&T plans to double revenues from its offshore business by getting into the construction of rigs. The company, which presently earns 20 billion rupees from its offshore business, also plans to manufacture offshore supply vessels and expects to generate 40 billion rupees within 3 years, with business from the Middle East, Southeast Asia, and Norway.
The company plans to build two new ports at Dhamra in Orissa and Kakinada in Andhra Pradesh at an aggregate cost of around 30 billion rupees.
A subsidiary to be named Infrastructure Development Projects will eventually be the lead company in the group for all land construction projects, including a mega shipyard to be built on either the west or east coast of the country.
"Healthy growth in the shipping sector with reasonable returns will help the company derive maximum benefits from these projects," said L&T's senior executive vice-president, Heavy Engineering, M.V. Kotwal.
Last year, L&T invested 1.18 billion rupees in building a port at Sohar, Oman, to complement a shipyard it has constructed, where it plans to build rigs and other offshore equipment for exploration and production.
"We have initiated talks with several oil and gas companies to seal contracts for the provision of offshore services," said Kotwal. "In addition, we would like to acquire the requisite technological strength in deepwater exploration by entering into collaboration with foreign companies. The company is looking at the upstream oil and gas segment as a very prospective business for the future."
