New shipping rule may hit Indian offshore operations
India's leading oil and gas players say they may be forced to halt offshore operations because of new rules issued by the country's federal shipping ministry.
In May, the Directorate-General of Shipping (DGS) placed an operational embargo on all vessels more than 25 years old.
But Oil and Natural Gas Corporation (ONGC) uses more than 100 such vessels to support oil and gas production from fields such as Mumbai High and to help explore new prospects.
Reliance Industries Ltd (RIL) uses more than 40 such vessels to service its largest gas field in the Krishna Godavari basin, in eastern India.
'New vessels are not easily available in a tight global market,' says ONGC chairman and managing director R S Sharma. 'Implementation of these rules would mean our offshore oil and gas operations will collapse.'
Mr Sharma said ONGC vessels more than 25 years old are 'certified by international safety agencies, underwritten by global insurers and meet the strictest of safety norms anywhere in the world'.
But the DGS's orders were not issued without cause.
In July last year, the ONGC-chartered ship Samudrika-10 sank off the Mumbai coast, killing five people on board.
After the incident, in a notice to ONGC, the DGS ordered that 27 offshore supply vessels (OSVs) be recalled to base to undergo safety management tests before resuming duty at Mumbai High.
ONGC had to scramble to procure replacement vessels to be deployed in fields situated 160km off the Mumbai coast.
Reports at the time said it needed 30 vessels to maintain production, but could only get 15 from the market.
OSVs are vital for oil and gas operations. They provide logistic and operational support, transport heavy equipment from shore to rigs, and carry fire-fighting equipment, water and food that sustain the rigs and their workers.
Depending on facilities, an OSV can cost US$14,000 to US$100,000 a day to hire.
Observers say the offshore operations of ONGC and RIL will be affected by the DGS's ban on older vessels, but that the ban is justified because business cannot be done at the cost of human life.
Some experts feel a middle path could be worked out, with OSVs recalled for safety verification in batches to make sure they meet government specifications. This would minimise disruption to production, while maintaining safety.
In May, the Directorate-General of Shipping (DGS) placed an operational embargo on all vessels more than 25 years old.
But Oil and Natural Gas Corporation (ONGC) uses more than 100 such vessels to support oil and gas production from fields such as Mumbai High and to help explore new prospects.
Reliance Industries Ltd (RIL) uses more than 40 such vessels to service its largest gas field in the Krishna Godavari basin, in eastern India.
'New vessels are not easily available in a tight global market,' says ONGC chairman and managing director R S Sharma. 'Implementation of these rules would mean our offshore oil and gas operations will collapse.'
Mr Sharma said ONGC vessels more than 25 years old are 'certified by international safety agencies, underwritten by global insurers and meet the strictest of safety norms anywhere in the world'.
But the DGS's orders were not issued without cause.
In July last year, the ONGC-chartered ship Samudrika-10 sank off the Mumbai coast, killing five people on board.
After the incident, in a notice to ONGC, the DGS ordered that 27 offshore supply vessels (OSVs) be recalled to base to undergo safety management tests before resuming duty at Mumbai High.
ONGC had to scramble to procure replacement vessels to be deployed in fields situated 160km off the Mumbai coast.
Reports at the time said it needed 30 vessels to maintain production, but could only get 15 from the market.
OSVs are vital for oil and gas operations. They provide logistic and operational support, transport heavy equipment from shore to rigs, and carry fire-fighting equipment, water and food that sustain the rigs and their workers.
Depending on facilities, an OSV can cost US$14,000 to US$100,000 a day to hire.
Observers say the offshore operations of ONGC and RIL will be affected by the DGS's ban on older vessels, but that the ban is justified because business cannot be done at the cost of human life.
Some experts feel a middle path could be worked out, with OSVs recalled for safety verification in batches to make sure they meet government specifications. This would minimise disruption to production, while maintaining safety.