Cochin Shipyard Ltd (CSL), India’s largest commercial shipbuilder, is in advanced discussions with Oil and Natural Gas Corporation Ltd (ONGC) for a potential $550 million order to construct two offshore jack-up oil drilling rigs, sources have revealed.

The shipyard has bolstered its prospects by signing a Memorandum of Understanding (MoU) with Seatrium Letourneau USA, Inc. (SLET), a subsidiary of Singapore-based Seatrium Ltd, for design and critical equipment supply for these rigs. The partnership aligns with India's "Make in India" initiative, aiming to enhance local manufacturing capabilities for Mobile Offshore Drilling Units (MODUs).

In its stock exchange filing on November 22, CSL highlighted that this collaboration leverages its shipbuilding expertise and SLET’s advanced technical and design capabilities to meet the demands of India's offshore energy sector. Seatrium Ltd, formed after Sembcorp Marine’s acquisition of Keppel Offshore & Marine in 2023, affirmed its commitment to delivering innovative and efficient offshore solutions through this partnership.

ONGC’s board has already approved the rig construction project, which aims to replace aging rigs in operation for over four decades. According to Om Prakash Singh, Director of Technology and Field Services at ONGC, the move to build rigs locally will help Indian shipyards develop expertise in manufacturing advanced offshore platforms.

This potential order would enable Cochin Shipyard to diversify its portfolio, which currently includes cargo vessels, passenger ships, dredgers, hybrid tugs, and defence ships such as aircraft carriers and ASW Corvettes.

Under the government's financial assistance scheme for shipbuilding, MODUs and jack-up rigs are categorised as specialised vessels eligible for state aid. The scheme, set to expire in March 2026, provides a 14% subsidy for orders secured until March 2025, with a reduced 11% subsidy in its final year. There is no cap on subsidies for specialised vessels like MODUs, unlike standard ships where aid is capped at Rs 400 million.

The Ministry of Ports, Shipping, and Waterways is currently drafting a new shipbuilding policy that proposes enhanced subsidies, including 25% for specialised vessels and up to 30% for green and futuristic technology ships. The revised scheme, expected to run until 2034 with possible extensions through 2047, aims to provide long-term stability and visibility for domestic shipyards.

(ET)