Oil and gas exploration activities of state-owned firms like Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL) are now being adversely hit due to the sharp rise in cost of oil rigs and acute shortage of skilled manpower.

The ONGC, in a note presented to the Petroleum Ministry, has explained in detail how the twin problem of the increased cost of oil rigs and non-availability of skilled personnel are badly affecting exploration activities both in the domestic and overseas front, ONGC sources told Deccan Herald.

The expenditure on account of exploration and production (E and P) has been shooting up because of the growing scarcity of oil rigs – especially those used in deep sea – ONGC said.

On top of this, the high attrition rate of skilled manpower, who are being lured away by the private sector, is adversely affecting E and P activities of ONGC, sources said.

High energy prices
V N Dhoot, Chairman of VIDEOCON Group – a major private sector player in oil exploration and production venture –  says that the demand of rigs has risen globally in response to relatively high energy prices. Indian exploration and production companies are feeling the pinch of their acute shortages to the extent of over 60 per cent.

He pointed out that a total of 138 offshore rigs were on order or under construction in July 2007 as compared to just 29 in April 2005. 

Fabrication yards that make rigs are running huge backlogs and some reputed yards are completely booked with current orders till 2010.

Even a study conducted by Ernst & Young has revealed that Oil exploration and production companies are not only facing acute shortages  of drilling rigs by over 60 per cent but also suffering from a crunch of skilled personnel to an extent of 40 per cent which has resulted in inordinate delays of their hydrocarbons discovery schedule, with project costs exceeding about 30 per cent in the last 3 to 4 years. 

The mismatch between the demand of drilling rigs and their supplies on one hand and shortages of skilled personnel against their demand for oil and gas exploration if not addressed urgently, will result in India’s crude import rising by 20 per cent.