BHEL scouts for allies to revive rig business

With increase in oil exploration activity worldwide due to rising price of crude, BHEL is considering reviving its oil rigs business and scouting for partners for the venture.

"We are considering to revive the business of manufacturing oil rigs. We have some facilities in Hyderabad and... May require marginal investments of up to Rs 40 crore to renovate the facility," BHEL CMD Ashok K Puri told PTI.

On the partners, he said: "We are looking for good partners and have initiated talks with some companies for a possible tie up."

BHEL was in rig manufacturing business 25 years ago and had supplied rigs to companies like ONGC and Oil India and same are being referred to BHEL for renovation, he said.

Puri said the investment for reviving oil rig business was part of its Rs 3,200 crore investment during the 11th five year plan.

Asked about the potential of the rig business in India, he said it was a minimum of Rs 300-400 crore annually and if exports were taken into consideration the business could go up to Rs 1,000 crore.

A team has been constituted by the company to prepare a feasibility report on this and the same would be placed before the Board of Directors soon, he added.

Asked whether new facilities for manufacturing oil rigs would be created, Puri said a final decision would be taken only after completion of the feasibility report.

About two years back, BHEL had signed a Memorandum of Understanding with Oil India Ltd for the refurbishment and upgradation of their land rigs with business opportunity to the tune of Rs 100 crore. BHEL, since the first order for oil rigs in 1977, has manufactured and supplied 84 drilling and well servicing rigs to both ONGC and OIL.

In addition, BHEL has upgraded three rigs by installing Independent Rotary Device systems.

Asked whether BHEL would partner with domestic company or overseas, Puri said it could be either but declined to elaborate saying the details were being worked out.