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Oil exploration faces 60%+ drilling rigs shortage

Business

Oil exploration and production companies are facing acute shortages of drilling rigs by over 60%, according to a paper by Assocham. The paper says that the sector is also facing crunch of skilled personnel to an extent of 30% which has resulted into inordinate delays of their hydrocarbons discovery schedule, with projects cost exceeding about 30% in last 3-4 years.
The paper, ‘Indian Oil & Gas Sector: An overview’, further highlights that mismatch between 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, India’s crude import will go up by 20%.
Currently, 70% of India’s petroleum, oil & lubricant (POL) requirements are met through imports which might go up to 90% by 2012, warns the Paper.
Releasing the Paper, DS Rawat, Secretary General Assocham says that the rigs demand have risen globally in response to relatively higher energy prices and Indian exploration and production companies are feeling the pinch of their acute shortages to the extent of over 60%.
He pointed out that as per available statistics, a total of over 145 offshore rigs are on order or under construction until recently as compared to just 29 in April 2005. "Fabrication yards that make rigs are running huge backlogs and some of the reputed yards are completely booked with current orders untill end of 2010.’
As regards to skill shortages in terms of manpower, the upstream sector faces it to the extent of 30% against its total requirement as out of 400,000 engineers, 60,000 MBAs and 7000 PhDs that India produces every year, only 10 to 25% of these are considered employable. Of these employable lot, nearly 35% are absorbed by IT and ITeS industries and about 45% by manufacturing sector. Exploration and production being the highly risky profession, good engineers, geologists and geophysics are always in demand, says the Paper.
According to estimates made by Assocham, the global exploration and production workforce alone is around 3,75,000 people. Looking at the current demand supply scenario of trained manpower for professional services in oil & gas sector by 2012, the manpower requirement would double.
The Paper recommends that availability of rigs should be created with government efforts and oil production companies be given free hand to order chartering of rigs from their manufacturers even without little intervention as one day operational costs for a rig works out to be nearly $ 1,40,000. Likewise, specialised institutions for petroleum & engineering should be opened up in areas where prospective and potential reserves of oil and gas have been found.
It also suggests that cost escalation of petroleum projects could be curbed if the oil companies are not subjected multiple government approvals in due to their huge project costs which run into several thousand of crores.

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