The Journey to Establish Jack-Up Drilling Rig Contract in Indonesia during Upward Demand

Abstract

The Jack-up rig market is very dynamic as it is sensitive to oil prices and drilling activities. An effective strategy must be defined to achieve a successful tender process. A market survey shall be sourced from potential bidders and credible research institutions to provide competitive cost estimation and mapped available qualified rigs. Commercial structure is another factor that must be specified clearly. Numbers of wells or long term contracts will attract more rigs to enter Indonesian water that can be achieved by collaborating with other operators. It was quite challenging to establish a rig contract at first stage of tender to cover 1 (one) year duration with an unattractive owner estimation that ended up with a failed tender. By having collaboration with the host authority, other operators and potential bidders, the new strategy to have a long term contract by increasing the number of wells and contract duration to 3 (three) years can be finalized efficiently. The enhanced commercial structure consisted of rate classification as per the Indonesian Oil, Gas and Geothermal Drilling Contractors Association, modification cost, facility support service, reimbursable cost, etc. which have attracted more bidders. Finally, the jack-up rig contract can be established and agreed within the market price. The cost saving to cover future drilling projects has resulted in a total saving of USD 9.7 Million