In 2023, the New York Stock Exchange-listed Halliburton, the world’s second largest oil service company, secured a three-year contract from ONGC to supply a well stimulation vessel at $36,000 a day.
To perform the contract, Halliburton chartered a well stimulation vessel from Mumbai-based Samson Maritime Ltd.
The vessel named ‘Ocean Turquoise’ is so important that today it is one of only two well stimulation vessels in the country operating under the Indian flag. The other is a 39-year-old vessel owned by ONGC which recently returned to operations after a long repair.
Well stimulation vessels play a key role in enhancing the capacity of the existing oil wells; they stimulate the wells to produce more oil and the cost of production is very low because these are wells which exist and, hence, very beneficial to ONGC and the country.
It is understood that the oil explorer needs at least five well stimulation vessels for efficient production. Halliburton is said to have stopped performing on the contract due to a dispute with Samson Maritime, sources said.
“This is a very volatile market. Halliburton was awarded the contract at quite a low price. So now their intention actually is to frustrate the contract, wriggle out of it and get into a new contract at a much higher rate. And their conduct in the past also suggests this; they’ve done this with a vessel named ‘Lewek Altair’ and reportedly with one more vessel,” said an industry source, noting that “these things happen when the market is on the rise”.
In the current market, a well stimulation vessel earns more than $60,000 a day.
To add a new twist to the development, Singapore-based Alphard Group, has acquired the well stimulation vessel named ‘Ocean Turquoise’ from Samson Maritime for an undisclosed amount.
Halliburton, according to sources, is said to be playing a “double game”.
“Halliburton is believed to have told ONGC that it is not able to perform on the contract because Samson Maritime is not making the vessel available to ONGC. On the other hand, Halliburton is allegedly not letting Samson Maritime carry out critical and time sensitive dry dock on the vessel and has taken legal recourse to block Samson Maritime from delivering the vessel to Alphard,” said a source with knowledge of the matter.
“So, in effect, they don’t want to perform but they want to project to ONGC and to the court that it is not performing because Samson Maritime is not letting it perform. Whereas the reality is that they don’t want to perform,” the source cited above said.
“Our arrangement/understanding is that Samson Maritime has to give the vessel to us charter free. But Halliburton said this is a very important work and wants the vessel. So, we told Halliburton, ‘Ok if you want the vessel, you sign a new contract with us, and we will give you the vessel’. Halliburton, however, is not agreeable to this and is seeking to improve its contractual position and impose additional conditions which are not the industry norms,” a representative from Alphard said.
Halliburton is said to have “defaulted” on ONGC contracts in the past.
The first three-year contract which Halliburton secured from ONGC was at a rate of about $16,000 a day when the market was low.
But the next three-year contract went for some $36,000 a day. The moment it got the contract for $36,000 a day, Halliburton was not keen to perform on the $16,000 a day contract, the source mentioned earlier said.
In the third contract, Halliburton quoted about $60,000 a day to win a new three-year deal. Now, it is said to be not keen on performing the $36,000 a day contract.
The ‘Lewek Altair’ work was taken for $16,000 a day while the ‘Ocean Turquoise’ contract was finalised at $36,000 a day.
Halliburton has hired ‘Jag Roopa’ (a platform supply vessel to be converted into a well stimulation vessel) from Greatship (India) Ltd, a unit of The Great Eastern Shipping Company Ltd, to perform the $60,000 a day contract from ONGC.
“Knowing fully well that the vessel certificates of ‘Ocean Turquoise’ are expiring by the end of April 2024, Halliburton approached the court in March seeking injunction on the vessel proceeding for dry dock allegedly with the intent of delaying the process beyond certificate validity and thus frustrating the contract on grounds of force majeure. On the other hand, Halliburton is allegedly preventing the vessel from proceeding on its scheduled and critical maintenance routine without which the vessel cannot work and in the same breath they are blaming Samson Maritime for making the vessel unavailable. Once the vessel certificate expires, the vessel is not permitted to sail out from the port and reach the repair yard,” the source said.
Despite all these, ONGC is unlikely to blacklist Halliburton because there are only two companies in the world that have the capability and the skills to operate well stimulation vessels; the other is Schlumberger Ltd, the world’s largest offshore drilling company, also based in Houston, Texas.
ONGC awarded three more contracts after Halliburton as it needs about five well stimulation vessels, but it will take time to mobilise these vessels. The last contract was awarded some three months back for about$60,000 a day.
