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Market Entry Strategy, Questions and answers
THE 2 BASIC QUESTIONS OF ENETRING
TO IRAN OIL & GAS DRILLING MARKET
ANSWERED BY SADEGH YAZDANI, PHD.
Published by: the PTPEconomist, April 2016
Sadegh Yazdani
International energy industry leader with over 25 years of experience,
Managing Director of NPSN Co. and a published author of 15 books in the
area of energy management, operation management, asset and cost
management. High-profile executive providing technical and business
expertise helping the US and European interests invest in/expand in the
Iranian market. Bi-culturally insightful and profit-minded operations
expert. Offers comprehensive market research and training solutions in
Project / Operational Management, Risk Management, Cost Estimation /
Management and other topics for the Oil & Gas industry. Conducted
training for 1255 trainees in the total of 40160 hours in 11 countries.
Developer and simulator for cost modeling and financing of Oil & Gas in Upstream, Midstream and
Downstream sectors. Directed 6 onshore projects in the fields of wellhead facilities, Gas Gathering
Units, Central Processing Facilities, Gas Compression Station, and Gas Pipeline and was a Project
Director Deputy for 2 offshore platform projects. The promoter of United Nations Industrial
Development Organization feasibility study in the region. Consultant for the Oil & Gas companies in
cost management for onshore and offshore, Upstream, Midstream and Downstream sectors, as well
as the EPC, Installation, Commissioning, and Operation phases. Sadegh Main Core strength in the Oil
& Gas Industry are:
✓ Training and Development
✓ Project Management
✓ Cost Estimation
✓ Cost Engineering
✓ Cost Management
✓ Project Feasibility Studies
✓ Risk Analysis and Management
✓ Tender Cash Flow Assessment
✓ Financing Oil & Gas Projects
✓ Asset Integrity Management
✓ Financial &
Economic Analysis
✓ Coaching &
Consulting
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Market Entry Strategy, Questions and answers
CONTENTS
Introduction............................................................................................................................................................3
Question one..........................................................................................................................................................3
1. Regulatory and Policy................................................................................................................................3
Answer Question One ............................................................................................................................................4
Question Two .........................................................................................................................................................7
2. Market entry strategy....................................................................................................................................7
Answer QUESTION TWO.........................................................................................................................................7
typical Stats from our DB........................................................................................................................................8
2015-2017 Rig plan.............................................................................................................................................8
Iran Clients Rig Count .........................................................................................................................................9
Iran Contractors Rig Count .................................................................................................................................9
Iran Contractors Drilling Services .....................................................................................................................10
Sample Drilling Tender 2015 ................................................................................................................................12
Endnotes...............................................................................................................................................................19
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Market Entry Strategy, Questions and answers
INTRODUCTION
Iran has had a hard time hiring or purchasing the drilling rigs, drilling services, drilling material, and even
engineering services in spite of the fact that local contractors has drilled around of 1780 wells during the last
20 years.
The need for international contractors becomes todays a big challenge for Iranian clients and general
contractors. The reasons why they are looking for international drilling services and contractors are mainly
because of:
1- Old Technology, limited resources and mismanagement,
2- Lack of enough knowledge and skill for engineering services and operation,
3- Lack of enough sources for preparation of material, services and consumables,
4- Low productivity of drilling rigs, crew and management,
5- Very high cost comparing with the international and regional norms for per feet of drilling,
6- Cost overrun and low CPI and SPI of drilling contractors who are working in Iran,
7- Limited number of drilling contractors against big amount of planned wells that should be drilled
causes the clients confine within the contractors and execute the project with respect to the
availability of the drilling contractors, the result is delay in projects,
8- Delay in payment by clients,
9- Lack of sustainable and stable banking system, to support Iranian drilling contractors
10- high variation on Currency exchange rates increases the risks for contractors and increase the drilling
contract value,
11- Abstruse rules and regulations specifically for local drilling contractors,
Nevertheless the drilling projects still creating more profit for contractors since the contractors are claiming
more by increasing the amount of changes during the execution of the project.
QUESTION ONE
1. REGULATORY AND POLICY
Aimed at addressing broadly the local content requirement for drilling contractors, project terms on offer and
likely how they will change moving forwards post-sanctions. The headlines of this part of the report are:
▪ Is there a legislative requirement for drilling contractors to have an Iranian partner? The current
understanding is that the Company can establish a wholly owned subsidiary or a branch in Iran
without the need for a local shareholder. Drilling crew can be >50% local
▪ What are the restrictions for the Company to do business during the pre/post sanctions period? What
are the absolutely “no go” areas and what are precautionary? What are the implications of any
American shareholder (if any) in the Company? If the sanctions are from EU, why/how other European
companies (with/without American shareholding) are being more aggressive?
▪ TheCompanyhasseveraloffers frompotentialIraniansupportpartners.Thereareongoing“gettoknow”
discussionswith themtoestablishcredibilityand capability–nocommitmentwhatsoever.Dowe needanylocal
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Market Entry Strategy, Questions and answers
support?Ifso,whatisthetypeof localsupportisrequired?Whatarethecriteria toselectsomeone?
ANSWER QUESTION ONE
1.1. In general there is not any legislative requirement for foreign drilling contractors to be partner
with Iranian companies. The contractors may establish their office and/or have representative in
Iran; in addition, they can establish wholly owned subsidiary company in Kish free zone for
offshore drilling and/or in Ahwaz for onshore drilling, with no need for local shareholder.
1.2. There is not any limitation for IOC to participate in Iranian oil & Gas projects. Moreover, from
Iranian point of view, the nationality of the IOC and nationality of the shareholders are not
important (except Israel). Nevertheless, as seen in the above sections, some sanctions still remain
in place after implementation of JCPOA (Joint Comprehensive Plan of Action, Nuclear Deal). The
remaining sanctions are the points that the IOC should take care about.
1.3. Based on the type of Drilling contract, the number of required crew may vary. To illustrate, if
contract is based on daily rate, the number of crew comes to 70-80 people. While, EPDS
(Engineering, Procurement, Drilling and Drilling Services) contracts should involve client’s
personnel on rig as well as service companies for management. A base in Kish for offshore and/or
in Ahwaz for onshore separately requires at least 15 people. Hence, rig crew would be about 90-
100 people.
1.4. Among the drilling crew, key personnel are international while others can be locals. Key personnel
are:
➢ Drilling Superintendent
➢ Tool Pusher
➢ Night Pusher
➢ Senior Driller
➢ Senior Electrician
➢ Senior Mechanic
Following table presents daily rates for personal on onshore drilling rig for a typical drilling
project in Iran, Year 2014i
:
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Market Entry Strategy, Questions and answers
1.5. Projects are available based on daily rates and EPDS before implementing JCPOA; accordingly, to
get complete EPDS you should join local contractors or those of other sources or should work with
companies having EPDS projects as drilling sub-contractor. You may do drilling as daily rate or take
its risk and do turnkey drillingii
.
1.5.1. Daily rate without taking any risk in Iran: Chinese contractors’ rates 21,000-23,000 USD/Day
for 2000 HP with crew, Iranian contractors’ rates 25,000-27,000 USD/Day with crew!
1.5.2. An EPDS project by Chinese drilling contractor for a 4,400 meters well in Azadeganiii
was
done with the cost of 12 MMUSD in which drilling part was operated in 120 days and cost
3.5 MMUSD!!
Table 1- Typical daily rate for personal on onshore drilling rig, 2014
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Market Entry Strategy, Questions and answers
1.6. Re-Imbursement / Payment
The most important challenge was/is payment; since there is no available source for payment, all
contractors would not be paid within about 6 month to one year. Some ask NIOC for barter
payment, that is receipt of crude oil or other products instead of their invoices.
It is expected this challenge is resolved after implementation of JCPOA, since the Iranian blocked
deposits will be released from the international financial entities.
1.7. No-Go areas: Making contract without LC, without guarantee for payment, without having enough
information on tax and regulations, SSO, rules of employment, work permits, work law,
allowances, etc.
The Iranian contractors usually get NIOC corporate’s guarantee letter with special terms and
conditions from a bank for issuing local banks guarantee and need well communication skills and
connection to the local banks.
1.8. No restriction is for American shareholders. They are welcomed. European contractors are willing
to use their extra capacity in Iran. In this case they will act as driving force for Iranian projects in
the future. Americans made foundation of Iranian oil & gas industry, they know what are in it and
what don’t, Americans think that 200 years was "ancient" while For a European "ancient" refers to
something that is typically 2,000 to 5,000 years old. Iran oil & gas drilling industry is “ancient" for
Americans and it should be renovated and re-structured from their point of view and this is the
exact case that Iranian drilling projects need.
1.9. You need local support for making connections and communications with clients and transfer the
organizational culture to the drilling contractor, back-ups and logistics, crew1
, and also prepare
enough capability to comply with NIOC requirements. The requirements are mainly is mentioned
in Tender documents and in between negotiations. Main requirements are:
➢ Pass the way till reach to be in the approved vendor list, different clients have different (pre)
qualification forms, but in general the main items that are audited by the clients are technical
capability, human resources, assets, machinery, financial capabilities, and so on. Proper Local
support will guide the contractor how to document and how to arrange the things for passing
this step very fast,
➢ Have enough information about the environment of the project, location and the culture of the
local people, local support can prepare qualified information,
1
Contact us for full report on Available resources (labor/crew, Material, Machinery, list of accredited suppliers/ contractors/sub-
contractors and Consumables) in Iran for Drilling projects. There are a full Database in this area.
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Market Entry Strategy, Questions and answers
➢ Have clear understandings about the rules and regulations, TAX, SSO, work laws, and so on.
1.10. The main criteria to select local partner, from Iran point of view, is the Iranian partner should be
qualifiediv
by NIOC or one of its subsidiaries and has enough previous experiences on drilling
projects in Iran, and at the same time the partner should be out of the list of sanctioned entitiesv
.
QUESTION TWO
2. MARKET ENTRY STRATEGY
How can the Company implement a market entry strategy that will deliver it first-mover advantage whilst
allowing the company to make commercial return? This section will analyses market entry options in the next
6-12 months considering the market conditions. The headlines of this part of the report are:
▪ If the IOC’s will not require drilling services within the initial 6-12 months, should we deploy two land
rigs into Iran early in 2016, upon lifting of sanctions (one 2,000hp and one 1,500)? Who could be our
client? How/when are we going to get paid? (See issue on liquidity and cash constraints in the
economy)? How can we assure this is done profitable while gaining first mover advantage? What
should be the medium and long term strategy? How can the Company establish itself with NIOC and
its operating subsidiaries?
ANSWER QUESTION TWO
About one year pre-investment activities are required to enter to Iran oil & gas projects. This period
can be shortened if a proper local partner is available for the foreign contractor. During this period,
the drilling contractor should pass the qualification stage and is listed as one of the qualified
contractors in the approved vendor list. The contractor will receive tender documents in the next step.
The duration of the selection and bid award is considerably long in Iran due to complicated process.
In parallel the contractor should well understand the country, the culture, the project(s) environment
and make well connected contacts. Therefore an action plan should be made for capacity building and
for gaining first project. The action plan will let you know:
➢ Requirements of local market ,
➢ Available projects, daily rate, EPDS…,
➢ Negotiating with IPC companies in Iran ,
➢ Finding suitable partner
➢ Contracts terms and conditions
➢ Bank services, guarantees
➢ Local Services, Lower cost spares, etc.
➢ Intl key personnel rules and procedures inside Iran
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Market Entry Strategy, Questions and answers
It is not necessary to put more cost on the first year. You may want to assign a local consultant and or
service provider company to do the pre-entry jobs. No need to open an office at this stage, the mentioned
service provider company can prepare you with office, local address, local company formation services,
secretary, coordination services and meetings arrangements with the clients, keep you update with the
ongoing , government decisions, rules and regulations, your competitors status, conferences, exhibitions,
newly resolved and newly raised risks, employment status, work permits, … and many other pre-
investment and pre-operation activities.vi
Despite of existence of many projects in Iran faced with delay
as well as many projects looking for drilling rigs, at the same
time there are idle rigs which do not have job because clients
cannot afford to pay invoices. NIOC and NIOC affiliated
companies such as NIOC-South, NIOC-Central, PEDEC,
Arvandan, Exploration directorate and others like NIDC, NPCO,
OEID, Global, and Dana…are Potential Clients with the main
difficulties of delayed payments. The Contractors are paid
with one year delay.
In addition 1,500 HP land rigs are not applicable since most of the customers and clients are looking for
2,000 HP land rigs that are based on the situation of wells.
Suggestions are:
➢ One year restricted presence in Iran with controlled cost, use local valuable service provider,
➢ Get a job with control rigs consider long reimbursement for next 6 month after one year investment,
➢ Think about as 1.5 to 2 years for long terms activities.
TYPICAL STATS FROM OUR DB
2015-2017 RIG PLAN
• Target drilling onshore wells 1172,work over 836 wells
• Target drilling offshore wells 588,work over 518 wells
• Rig requirements 130 land,50 offshore
First mover to this market
can take the risk to get a job
while it is easy, if it proves
that has enough financial
support to compensate
delayed payment.
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Market Entry Strategy, Questions and answers
IRAN CLIENTS RIG COUNT
Owner Name
Onshore/
Land
Mobile
Offshore/
Jack up
Semi-Submersible Total
NISOC 47 47
ICOFC 20 20
PEDEC 13 2 15
ARVANDAN 2 2
EXPLORATION 10 10
IOOC 2 15 17
POGC 12 12
KHAZAR 1 1 2
Total 94 0 30 1 125
IRAN CONTRACTORS RIG COUNT
Owner Name
Onshore/
Land
Mobile
Offshore/
Jack up
Semi-Submersible
Total
NIDC 75 6 81
NDCO 10 3 1 14
PENSION FUND 9 9
DANA 3 2 5
NAFTKAV 3 3
PIRA HAFARI 3 3
GLOBAL 3 8 11
SEPANTA 3 3
SIPC 2 2
GWD 7 7
PEDEX 5 5
Total 120 3 19 1 143
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Market Entry Strategy, Questions and answers
IRAN CONTRACTORS DRILLING SERVICES
Iran contractors available drilling servicesvii
Services
Contractors
NIDC
PETROSANAT
PERTODANIAL
PETROTAHA
MAPSA
DANA
PERSIA-
CEPANTA
PETROASMARI
PEZVAK
SARVAK
KANDANA
NAFTKAV
SEALAND
WSI/SCHLUM
MEHRAN
CNLC
SSCC
SIPC
ALGHAIS
OEOC
SEPANTA
PIRAHAFARI
DALAHOO
CEMENTING 69 10 8 4 7 2 5 3 4 3
WASTE
MANAGEMENT
9
MUD LOGGING 40 1 3
SLICK LINE 5 1 3 4
SURFACE
TESTING
5 1 3
CASING CREW 30
ELECTRICAL
LOGGING
14 1
COIL 7 1 1 3 3 3 5
DIRECTIONAL 5 1 1
NITROGEN 3 3 1 3
AIR DRILLING 5
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Market Entry Strategy, Questions and answers
Services
Contractors
NIDC
PETROSANAT
PERTODANIAL
PETROTAHA
MAPSA
DANA
PERSIA-
CEPANTA
PETROASMARI
PEZVAK
SARVAK
KANDANA
NAFTKAV
SEALAND
WSI/SCHLUM
MEHRAN
CNLC
SSCC
SIPC
ALGHAIS
OEOC
SEPANTA
PIRAHAFARI
DALAHOO
UNDERBALANCE
DRILLING
2
RTTS 6 1 1
MECHANICAL
DST
4 1
CORING 4 2 1
H2S 9
FISHING 2
LOGGING 2 2 3 1 3 24 9
CASING RUN 2 1 3
TESTING 1 4
ACID SHIP 2
FULL BORE DST 1
WELL HEAD
SERVICES
1
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Market Entry Strategy, Questions and answers
SAMPLE DRILLING TENDER 2015
Sample Tender for Drilling Project
… a premier public sector undertaking of …. engaged in exploration, production &
transportation of hydrocarbons invites EOI from reputed and established E & P service providers
meeting the prequalification criteria as mentioned below for empanelment /short listing of
contractors for issue of tender document for supply of rig package for drilling five (5) numbers
of wells in the … block: …..
2.0 PROJECT INFORMATION:
… being the operator in the above mentioned … block, has to drill 5(five) drilling wells
within the stipulated time frame. It is proposed to charter hire a drilling rig package of 2000HP
(minimum) capacity to drill five (5) numbers of wells at various sites within the … block.
2.1 … has the most variegated hilly terrain in the … with 21 hill ranges of different altitudes
(maximum altitude of around 1800m and in general 900 m to 1200 m) with succession of long
valleys running mostly from North to South covering the entire state. The hills are very steep and
rugged with intervening deep gorges. Two major roads namely … and State Highway funded by
… run almost parallel to each other in North–Southern direction through the center of the state
as well as … block. Both the roads emanate from … and converge at …, the second largest town
in … These two highways will serve as the major feeders for any drilling locations within the …
block. The roads are in hilly terrain full of sharp curves with steep gradient. The other connecting
roads are narrow having sharp horizontal curves with steep gradient in many places.
3.0 GEOLOGY OF THE AREA:
….
….
4.0 LOCATION OF THE AREA:
….
5.0 BRIEF SCOPE OF WORK:
Drilling of five (5) numbers of onshore exploratory wells of depth ranging from 4000m
to 5300m through charter hire of a 2000 HP (minimum) drilling rig package including a suitable
Effluent Treatment Plant (ETP) for an initial period of 2 years with provision of extension by
one more year at the same terms and conditions, in high dip angle thrust belt area in hilly terrain
involving difficult logistics in the …. The roads leading to the drilling locations are in hilly
terrain with sharp turning and steep gradient where the maximum single load with
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Market Entry Strategy, Questions and answers
Sample Tender for Drilling Project
carrier/trailer should not exceed 35 MT for transportation.
6.0 DRILLING RIG:
6.1 The vendor shall have to be in possession of the rig to be offered either owned or leased. In
case, the vendor is not in possession of the rig at the time of submission of EOI, they may offer
a rig for which they intend to have an agreement for lease/buy.
6.2 The horsepower rating of the rig should be minimum 2000 HP. Further, the rig should be
Diesel Electric, having self-elevating mast and sub-structure (as per API standard) and also
suitable for cluster location (1 + 1 Wells). Spacing between wells at surface on cluster well plinth
is 15m (approx.). The rig would have to be equipped with proper effluent treatment plant. The
vendor should have access to suitable top drive system which can be mobilized and fitted to the
offered rig if required on call basis.
6.3 The Rig should not be more than 7 years old as on the bid closing date.
6.4 Further, the drilling unit should have a residual life of 7 years as on the bid closing date. The
inspection and certification regarding the residual life of the rig should be done by any of the
following inspection agencies:
(a) DNV
(b) ABS
(c) BV
(d) LLOYDS
(e) Oilfield Audit Services
6.5 The transportation of rig package to the drilling locations will be the responsibility of the
vendor. Because of difficult logistics it is suggested that the transportation of the rig package
might have to be done in such a way that single consignment should not be more than 35 MT
including the weight of the carrier. Additionally, the vendor may decide upon the length of the
carrier.
7.0 MANPOWER
The vendor must have the key personnel with requisite experience and qualification as specified
in Annexure-I. The Area Manager/Rig Superintendent, Tool Pusher, Tour pusher, Driller and
Asst. Driller should possess valid International Well Control Forum (IWCF) certificate at
appropriate levels and should be fluent in English.
8.0 SAFETY COMPLIANCE:
The vendor shall have to comply with the applicable and prevailing provisions of …
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Market Entry Strategy, Questions and answers
Sample Tender for Drilling Project
9.0 PRE-QUALIFYING CRITERIA:
9.1 The vendor must fulfil the following minimum pre-qualifying criteria for empanelment /
short-listing for issue of tender documents for charter hire of 2000 HP (minimum) rig
package.
9.2 The vendor must have the following experience during the last 7 (seven) years as on bid
closing date:
(i) Minimum one year continuous experience of providing drilling services with minimum
2000 HP rig capacity on charter hire basis.
(ii) Drilling of at least 5 (five) nos. oil/gas wells with drilling rig of minimum 2000 HP capacity
out of which one well should be of depth range 4000 m (minimum) and one well must be in
fold belt area.
9.3 Average annual financial turnover as per Audited Annual Reports during the last 3 years
(ending 31.03.2011) shall be at least ` or US$ 7.65 Million.
9.4 The average net profit of the vendor as per the past three years audited accounts need to be
positive.
9.5 In case, the vendor is consortium of companies, the Leader of the consortium should satisfy
the minimum experience requirement as per Para …
9.2 Above. However, any one of the consortium members individually shall have to meet the
financial turnover criteria mentioned in Para 9.3 above. Additionally, all the consortium members
shall individually meet the criteria mentioned in para 9.4 above.
9.5.1 Legally acceptable Memorandum of Understanding has to be made between the consortium
members duly signed by the authorized executives of the consortium members clearly defining
the role/scope of work of each partner/member, binding the members jointly and severally to the
responsibility for discharging all obligations under the contract, if awarded, and identifying the
Leader of Consortium. Unconditional acceptance of full responsibility for executing the “Scope
of work” of the bid document by the Leader of the Consortium shall be submitted along with the
technical bid (in the event of issue of tender).
9.5.2 Only the Leader of the consortium shall submit bid (in the event of issue of tender) and
sign the contract agreement (in the event of award of contract) on behalf of the consortium.
9.5.3 The Bid Security from the Bank (as specified in the tender document) shall be in the name
of the Leader of the consortium on behalf of consortium with specific reference to consortium
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Market Entry Strategy, Questions and answers
Sample Tender for Drilling Project
bid and name & address of consortium members in the event of issue of tender document.
Similarly the Performance Security (as specified in the tender document) shall be in the name
of the Leader of the consortium on behalf of the consortium in the event of award of contract.
9.6 In case, the Bidder is an …. Company/… joint venture Company, either the … Company/…
Joint Venture Company or its technical collaborator/joint venture partner should meet the
criteria laid down at para 9.2 above. However, the …. Company/… Joint Venture Company
must meet the financial turnover criteria mentioned in Para 9.3 above.
9.6.1 … bidders quoting based on technical collaboration/joint venture, shall submit a
Memorandum of Understanding/Agreement with their technical collaborator/joint venture
partner clearly indicating their roles under the scope of work which shall also be addressed to
OIL and remain valid and binding for the contract period under this tender.
9.6.2 Any party who is extending technical support by way of entering into technical
collaboration with another party, shall not be allowed to submit an independent Bid against the
tender and such bids shall be rejected straightway. Further, all bids from parties with technical
collaboration support from the same Principal will be rejected.
10.0 INFORMATION & DOCUMENTS:
10.1 The vendor must furnish the following in support of fulfilling all the above pre-qualifying
criteria:
(a) Rig offered – documents relating to rig already in possession or propose to own / lease
along with brief technical specifications.
(b) Drilling experience of vendor – Statement to be furnished by vendor in a tabular form as per
Annexure-II along with copies of contracts / work orders, completion certificates / payment
certificates issued by the clients.
(c) Financial turnover of vendor as per Annexure-III along with Audited balance sheets /
profit and loss accounts etc.
(d) MOU or legally acceptable documents in support of consortium arrangements / technical
collaboration / joint venture arrangements, if any.
(e) A letter with categorical confirmation that the vendor shall provide key personnel as
indicated vide Annexure-I and shall deploy for drilling operation (in the event of award of
contract).
10.2 Details of current work in hand and other contractual commitments of the vendor are
to be submitted in a tabular form as per Annexure-IV along with copies of contracts/work
order.
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Market Entry Strategy, Questions and answers
Sample Tender for Drilling Project
10.3 Vendor while submitting the documents in support of their experience vide Clause 9.0 above
shall also submit details of experience of the Leader of the consortium on works/jobs done of
similar nature in the past along with the EOI, in case the vendor is consortium of companies.
10.4 All documents submitted with the EOI must be self-certified by the vendor’s authorized
person indicating clearly name & designation of the person.
Note:
(i) All the copies of document submitted along with the EOI should be clear & legible.
(ii) … reserves the right to physically check the original documents/certificate, copies of which
are submitted along with the EOI.
(iii) The EOI is liable to be ignored in case of submission of any misleading/false
representation by the vendor in the form, statements and attachments.
(iv) … reserves the right to ignore any or all EOIs without assigning any reason thereof.
(v) … reserves the right to curtail/ enhance the scope of the work stated above or cancel, if
required, without assigning any reason thereof.
11.0. SUBMISSION OF EOI
The EOI together with the information/documents as mentioned above should be submitted
in a closed envelop superscribing “ EOI for Charter Hire of 2000 HP Drilling Rig for NELP
block in Mizoram” and must reach the following address on or before …
Annexure-I of Tender
1. AREA MANAGER / RIG MANAGER/ RIG SUPERINTENDENT
A. Qualification: Graduate in Engineering / Science or three years Diploma in
Engineering.
B. Experience: i) should have work experience in deep drilling oil / gas wells, for
minimum 10 years, of which at least 5 years should be in a senior management level.
ii) Should be conversant with working in diesel electrical rigs/supplied rig. iii) Should
be conversant with mud chemicals & maintenance of mud property. iv) Should have
completed at least one gas well of minimum 4000m depth. v) Should have completed
one well in fold belt area.
C. Certification/License/ Health:
i. Must possess valid well control certificate (IWCF-Supervisor Level) and should be
conversant with well control methods to take independent decisions in case of well
emergencies.
ii. Should be of sound health to work in adverse weather condition in drilling well.
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Market Entry Strategy, Questions and answers
Sample Tender for Drilling Project
2. TOOL PUSHER:
A. Qualification: Graduate in Engineering / Science or three years Diploma in
Engineering.
B. Experience:
i. Should have work experience in deep drilling oil / gas wells, for minimum 10 years,
of which at least one year as tool pusher in exploratory & development wells.
ii. Should be conversant with working in diesel electrical rigs/supplied rig.
iii. Should be conversant with mud chemicals & maintenance of mud property.
Should have completed at least one gas well of minimum 4000m depth.
Should have completed one well in fold belt area.
Certification/License/ Health:
Must possess valid well control certificate (IWCF-Supervisor Level) and should be conversant
with well control methods to take independent decisions in case of well emergencies.
ii. Should be of sound health to work in adverse weather condition in drilling well.
3. TOUR PUSHER / NIGHT TOOL PUSHER:
A. Qualification: Graduate in Engineering / Science or three years Diploma in
Engineering.
B. Experience:
i. Should have work experience in deep drilling oil / gas wells for minimum 7 years in
drilling, out of which at least one year as tool / tour pusher of exploratory &
development wells.
ii. Should be conversant with working in diesel electrical rigs/supplied rig.
iii. Should be conversant with mud chemicals & maintenance of mud property.
. Should have completed at least one gas well of minimum 4000m depth.
. Should have completed one well in fold belt area.
C. Certification/License/ Health:
Must possess valid well control certificate (IWCF-Supervisor Level) and should be
conversant with well control methods to take independent decisions in case of well
emergencies.
ii. Should be of sound health to work in adverse weather condition in drilling well.
4. DRILLER:
A. Qualification: Graduate in Science or three years Diploma in Engineering.
B. Experience:
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Market Entry Strategy, Questions and answers
Sample Tender for Drilling Project
i. Should have work experience in deep drilling oil / gas wells for minimum 5 years out of
which at least one year as Shift In charge / Driller of exploratory & development wells.
ii. Should be conversant with working in diesel electrical rigs/supplied rig.
iii. Should be conversant with mud chemicals & maintenance of mud property.
Should have completed at least one gas well of minimum 4000m depth.
Should have completed one well in fold belt area.
Certification/License/ Health:
Must possess valid well control certificate (IWCF-Driller Level) and should be
conversant with well control methods to detect well kick, shut the well and assist Tool
Pusher/ Tour Pusher in case of well emergencies.
ii. Should be of sound health to work in adverse weather condition in drilling well.
5. ASSISTANT DRILLER:
A. Qualification: SSC/HS/PU/I. Sc. or equivalent
B. Experience:
i. Should have work experience in deep drilling oil / gas wells for minimum 4 years out of
which at least one year as Asst. Driller / Head-man of exploratory & development wells.
ii. Should be conversant with working in diesel electrical rigs/supplied rig.
iii. Should be conversant with mud chemicals & maintenance of mud property.
Should have completed at least one gas well of minimum 4000m depth.
Certification/License/ Health:
Must possess valid well control certificate (IWCF-Driller Level) and should be conversant
with well control methods to detect well kick, shut the well and assist Tool Pusher/ Tour
Pusher in case of well emergencies.
iii. Should be of sound health to work in adverse weather condition in drilling well.
19
Market Entry Strategy, Questions and answers
ENDNOTES
i
Contact us for full report on Iran Oil & Gas Drilling Salary Report
ii
Contact us For full report on the future drilling projects, Iranian drilling contractors and statistical analysis
and forecast
iii
For full report on the Iranian drilling contractor’s productivity, financial situations and performances
contact us.
iv
Contact us for full “contractor and or for leasing the onshore drilling rig (pre) qualification criteria” which
is issued by NIOC and its subsidiaries
v
Refer to this web link for sanctioned entities.
vi
Contact us for the detailed available scope of services, list service providers and estimated costs
vii
For detailed report on available drilling services contact us.

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Market entry strategy drilling contractor-iran

  • 1. 1 Market Entry Strategy, Questions and answers THE 2 BASIC QUESTIONS OF ENETRING TO IRAN OIL & GAS DRILLING MARKET ANSWERED BY SADEGH YAZDANI, PHD. Published by: the PTPEconomist, April 2016 Sadegh Yazdani International energy industry leader with over 25 years of experience, Managing Director of NPSN Co. and a published author of 15 books in the area of energy management, operation management, asset and cost management. High-profile executive providing technical and business expertise helping the US and European interests invest in/expand in the Iranian market. Bi-culturally insightful and profit-minded operations expert. Offers comprehensive market research and training solutions in Project / Operational Management, Risk Management, Cost Estimation / Management and other topics for the Oil & Gas industry. Conducted training for 1255 trainees in the total of 40160 hours in 11 countries. Developer and simulator for cost modeling and financing of Oil & Gas in Upstream, Midstream and Downstream sectors. Directed 6 onshore projects in the fields of wellhead facilities, Gas Gathering Units, Central Processing Facilities, Gas Compression Station, and Gas Pipeline and was a Project Director Deputy for 2 offshore platform projects. The promoter of United Nations Industrial Development Organization feasibility study in the region. Consultant for the Oil & Gas companies in cost management for onshore and offshore, Upstream, Midstream and Downstream sectors, as well as the EPC, Installation, Commissioning, and Operation phases. Sadegh Main Core strength in the Oil & Gas Industry are: ✓ Training and Development ✓ Project Management ✓ Cost Estimation ✓ Cost Engineering ✓ Cost Management ✓ Project Feasibility Studies ✓ Risk Analysis and Management ✓ Tender Cash Flow Assessment ✓ Financing Oil & Gas Projects ✓ Asset Integrity Management ✓ Financial & Economic Analysis ✓ Coaching & Consulting
  • 2. 2 Market Entry Strategy, Questions and answers CONTENTS Introduction............................................................................................................................................................3 Question one..........................................................................................................................................................3 1. Regulatory and Policy................................................................................................................................3 Answer Question One ............................................................................................................................................4 Question Two .........................................................................................................................................................7 2. Market entry strategy....................................................................................................................................7 Answer QUESTION TWO.........................................................................................................................................7 typical Stats from our DB........................................................................................................................................8 2015-2017 Rig plan.............................................................................................................................................8 Iran Clients Rig Count .........................................................................................................................................9 Iran Contractors Rig Count .................................................................................................................................9 Iran Contractors Drilling Services .....................................................................................................................10 Sample Drilling Tender 2015 ................................................................................................................................12 Endnotes...............................................................................................................................................................19
  • 3. 3 Market Entry Strategy, Questions and answers INTRODUCTION Iran has had a hard time hiring or purchasing the drilling rigs, drilling services, drilling material, and even engineering services in spite of the fact that local contractors has drilled around of 1780 wells during the last 20 years. The need for international contractors becomes todays a big challenge for Iranian clients and general contractors. The reasons why they are looking for international drilling services and contractors are mainly because of: 1- Old Technology, limited resources and mismanagement, 2- Lack of enough knowledge and skill for engineering services and operation, 3- Lack of enough sources for preparation of material, services and consumables, 4- Low productivity of drilling rigs, crew and management, 5- Very high cost comparing with the international and regional norms for per feet of drilling, 6- Cost overrun and low CPI and SPI of drilling contractors who are working in Iran, 7- Limited number of drilling contractors against big amount of planned wells that should be drilled causes the clients confine within the contractors and execute the project with respect to the availability of the drilling contractors, the result is delay in projects, 8- Delay in payment by clients, 9- Lack of sustainable and stable banking system, to support Iranian drilling contractors 10- high variation on Currency exchange rates increases the risks for contractors and increase the drilling contract value, 11- Abstruse rules and regulations specifically for local drilling contractors, Nevertheless the drilling projects still creating more profit for contractors since the contractors are claiming more by increasing the amount of changes during the execution of the project. QUESTION ONE 1. REGULATORY AND POLICY Aimed at addressing broadly the local content requirement for drilling contractors, project terms on offer and likely how they will change moving forwards post-sanctions. The headlines of this part of the report are: ▪ Is there a legislative requirement for drilling contractors to have an Iranian partner? The current understanding is that the Company can establish a wholly owned subsidiary or a branch in Iran without the need for a local shareholder. Drilling crew can be >50% local ▪ What are the restrictions for the Company to do business during the pre/post sanctions period? What are the absolutely “no go” areas and what are precautionary? What are the implications of any American shareholder (if any) in the Company? If the sanctions are from EU, why/how other European companies (with/without American shareholding) are being more aggressive? ▪ TheCompanyhasseveraloffers frompotentialIraniansupportpartners.Thereareongoing“gettoknow” discussionswith themtoestablishcredibilityand capability–nocommitmentwhatsoever.Dowe needanylocal
  • 4. 4 Market Entry Strategy, Questions and answers support?Ifso,whatisthetypeof localsupportisrequired?Whatarethecriteria toselectsomeone? ANSWER QUESTION ONE 1.1. In general there is not any legislative requirement for foreign drilling contractors to be partner with Iranian companies. The contractors may establish their office and/or have representative in Iran; in addition, they can establish wholly owned subsidiary company in Kish free zone for offshore drilling and/or in Ahwaz for onshore drilling, with no need for local shareholder. 1.2. There is not any limitation for IOC to participate in Iranian oil & Gas projects. Moreover, from Iranian point of view, the nationality of the IOC and nationality of the shareholders are not important (except Israel). Nevertheless, as seen in the above sections, some sanctions still remain in place after implementation of JCPOA (Joint Comprehensive Plan of Action, Nuclear Deal). The remaining sanctions are the points that the IOC should take care about. 1.3. Based on the type of Drilling contract, the number of required crew may vary. To illustrate, if contract is based on daily rate, the number of crew comes to 70-80 people. While, EPDS (Engineering, Procurement, Drilling and Drilling Services) contracts should involve client’s personnel on rig as well as service companies for management. A base in Kish for offshore and/or in Ahwaz for onshore separately requires at least 15 people. Hence, rig crew would be about 90- 100 people. 1.4. Among the drilling crew, key personnel are international while others can be locals. Key personnel are: ➢ Drilling Superintendent ➢ Tool Pusher ➢ Night Pusher ➢ Senior Driller ➢ Senior Electrician ➢ Senior Mechanic Following table presents daily rates for personal on onshore drilling rig for a typical drilling project in Iran, Year 2014i :
  • 5. 5 Market Entry Strategy, Questions and answers 1.5. Projects are available based on daily rates and EPDS before implementing JCPOA; accordingly, to get complete EPDS you should join local contractors or those of other sources or should work with companies having EPDS projects as drilling sub-contractor. You may do drilling as daily rate or take its risk and do turnkey drillingii . 1.5.1. Daily rate without taking any risk in Iran: Chinese contractors’ rates 21,000-23,000 USD/Day for 2000 HP with crew, Iranian contractors’ rates 25,000-27,000 USD/Day with crew! 1.5.2. An EPDS project by Chinese drilling contractor for a 4,400 meters well in Azadeganiii was done with the cost of 12 MMUSD in which drilling part was operated in 120 days and cost 3.5 MMUSD!! Table 1- Typical daily rate for personal on onshore drilling rig, 2014
  • 6. 6 Market Entry Strategy, Questions and answers 1.6. Re-Imbursement / Payment The most important challenge was/is payment; since there is no available source for payment, all contractors would not be paid within about 6 month to one year. Some ask NIOC for barter payment, that is receipt of crude oil or other products instead of their invoices. It is expected this challenge is resolved after implementation of JCPOA, since the Iranian blocked deposits will be released from the international financial entities. 1.7. No-Go areas: Making contract without LC, without guarantee for payment, without having enough information on tax and regulations, SSO, rules of employment, work permits, work law, allowances, etc. The Iranian contractors usually get NIOC corporate’s guarantee letter with special terms and conditions from a bank for issuing local banks guarantee and need well communication skills and connection to the local banks. 1.8. No restriction is for American shareholders. They are welcomed. European contractors are willing to use their extra capacity in Iran. In this case they will act as driving force for Iranian projects in the future. Americans made foundation of Iranian oil & gas industry, they know what are in it and what don’t, Americans think that 200 years was "ancient" while For a European "ancient" refers to something that is typically 2,000 to 5,000 years old. Iran oil & gas drilling industry is “ancient" for Americans and it should be renovated and re-structured from their point of view and this is the exact case that Iranian drilling projects need. 1.9. You need local support for making connections and communications with clients and transfer the organizational culture to the drilling contractor, back-ups and logistics, crew1 , and also prepare enough capability to comply with NIOC requirements. The requirements are mainly is mentioned in Tender documents and in between negotiations. Main requirements are: ➢ Pass the way till reach to be in the approved vendor list, different clients have different (pre) qualification forms, but in general the main items that are audited by the clients are technical capability, human resources, assets, machinery, financial capabilities, and so on. Proper Local support will guide the contractor how to document and how to arrange the things for passing this step very fast, ➢ Have enough information about the environment of the project, location and the culture of the local people, local support can prepare qualified information, 1 Contact us for full report on Available resources (labor/crew, Material, Machinery, list of accredited suppliers/ contractors/sub- contractors and Consumables) in Iran for Drilling projects. There are a full Database in this area.
  • 7. 7 Market Entry Strategy, Questions and answers ➢ Have clear understandings about the rules and regulations, TAX, SSO, work laws, and so on. 1.10. The main criteria to select local partner, from Iran point of view, is the Iranian partner should be qualifiediv by NIOC or one of its subsidiaries and has enough previous experiences on drilling projects in Iran, and at the same time the partner should be out of the list of sanctioned entitiesv . QUESTION TWO 2. MARKET ENTRY STRATEGY How can the Company implement a market entry strategy that will deliver it first-mover advantage whilst allowing the company to make commercial return? This section will analyses market entry options in the next 6-12 months considering the market conditions. The headlines of this part of the report are: ▪ If the IOC’s will not require drilling services within the initial 6-12 months, should we deploy two land rigs into Iran early in 2016, upon lifting of sanctions (one 2,000hp and one 1,500)? Who could be our client? How/when are we going to get paid? (See issue on liquidity and cash constraints in the economy)? How can we assure this is done profitable while gaining first mover advantage? What should be the medium and long term strategy? How can the Company establish itself with NIOC and its operating subsidiaries? ANSWER QUESTION TWO About one year pre-investment activities are required to enter to Iran oil & gas projects. This period can be shortened if a proper local partner is available for the foreign contractor. During this period, the drilling contractor should pass the qualification stage and is listed as one of the qualified contractors in the approved vendor list. The contractor will receive tender documents in the next step. The duration of the selection and bid award is considerably long in Iran due to complicated process. In parallel the contractor should well understand the country, the culture, the project(s) environment and make well connected contacts. Therefore an action plan should be made for capacity building and for gaining first project. The action plan will let you know: ➢ Requirements of local market , ➢ Available projects, daily rate, EPDS…, ➢ Negotiating with IPC companies in Iran , ➢ Finding suitable partner ➢ Contracts terms and conditions ➢ Bank services, guarantees ➢ Local Services, Lower cost spares, etc. ➢ Intl key personnel rules and procedures inside Iran
  • 8. 8 Market Entry Strategy, Questions and answers It is not necessary to put more cost on the first year. You may want to assign a local consultant and or service provider company to do the pre-entry jobs. No need to open an office at this stage, the mentioned service provider company can prepare you with office, local address, local company formation services, secretary, coordination services and meetings arrangements with the clients, keep you update with the ongoing , government decisions, rules and regulations, your competitors status, conferences, exhibitions, newly resolved and newly raised risks, employment status, work permits, … and many other pre- investment and pre-operation activities.vi Despite of existence of many projects in Iran faced with delay as well as many projects looking for drilling rigs, at the same time there are idle rigs which do not have job because clients cannot afford to pay invoices. NIOC and NIOC affiliated companies such as NIOC-South, NIOC-Central, PEDEC, Arvandan, Exploration directorate and others like NIDC, NPCO, OEID, Global, and Dana…are Potential Clients with the main difficulties of delayed payments. The Contractors are paid with one year delay. In addition 1,500 HP land rigs are not applicable since most of the customers and clients are looking for 2,000 HP land rigs that are based on the situation of wells. Suggestions are: ➢ One year restricted presence in Iran with controlled cost, use local valuable service provider, ➢ Get a job with control rigs consider long reimbursement for next 6 month after one year investment, ➢ Think about as 1.5 to 2 years for long terms activities. TYPICAL STATS FROM OUR DB 2015-2017 RIG PLAN • Target drilling onshore wells 1172,work over 836 wells • Target drilling offshore wells 588,work over 518 wells • Rig requirements 130 land,50 offshore First mover to this market can take the risk to get a job while it is easy, if it proves that has enough financial support to compensate delayed payment.
  • 9. 9 Market Entry Strategy, Questions and answers IRAN CLIENTS RIG COUNT Owner Name Onshore/ Land Mobile Offshore/ Jack up Semi-Submersible Total NISOC 47 47 ICOFC 20 20 PEDEC 13 2 15 ARVANDAN 2 2 EXPLORATION 10 10 IOOC 2 15 17 POGC 12 12 KHAZAR 1 1 2 Total 94 0 30 1 125 IRAN CONTRACTORS RIG COUNT Owner Name Onshore/ Land Mobile Offshore/ Jack up Semi-Submersible Total NIDC 75 6 81 NDCO 10 3 1 14 PENSION FUND 9 9 DANA 3 2 5 NAFTKAV 3 3 PIRA HAFARI 3 3 GLOBAL 3 8 11 SEPANTA 3 3 SIPC 2 2 GWD 7 7 PEDEX 5 5 Total 120 3 19 1 143
  • 10. 10 Market Entry Strategy, Questions and answers IRAN CONTRACTORS DRILLING SERVICES Iran contractors available drilling servicesvii Services Contractors NIDC PETROSANAT PERTODANIAL PETROTAHA MAPSA DANA PERSIA- CEPANTA PETROASMARI PEZVAK SARVAK KANDANA NAFTKAV SEALAND WSI/SCHLUM MEHRAN CNLC SSCC SIPC ALGHAIS OEOC SEPANTA PIRAHAFARI DALAHOO CEMENTING 69 10 8 4 7 2 5 3 4 3 WASTE MANAGEMENT 9 MUD LOGGING 40 1 3 SLICK LINE 5 1 3 4 SURFACE TESTING 5 1 3 CASING CREW 30 ELECTRICAL LOGGING 14 1 COIL 7 1 1 3 3 3 5 DIRECTIONAL 5 1 1 NITROGEN 3 3 1 3 AIR DRILLING 5
  • 11. 11 Market Entry Strategy, Questions and answers Services Contractors NIDC PETROSANAT PERTODANIAL PETROTAHA MAPSA DANA PERSIA- CEPANTA PETROASMARI PEZVAK SARVAK KANDANA NAFTKAV SEALAND WSI/SCHLUM MEHRAN CNLC SSCC SIPC ALGHAIS OEOC SEPANTA PIRAHAFARI DALAHOO UNDERBALANCE DRILLING 2 RTTS 6 1 1 MECHANICAL DST 4 1 CORING 4 2 1 H2S 9 FISHING 2 LOGGING 2 2 3 1 3 24 9 CASING RUN 2 1 3 TESTING 1 4 ACID SHIP 2 FULL BORE DST 1 WELL HEAD SERVICES 1
  • 12. 12 Market Entry Strategy, Questions and answers SAMPLE DRILLING TENDER 2015 Sample Tender for Drilling Project … a premier public sector undertaking of …. engaged in exploration, production & transportation of hydrocarbons invites EOI from reputed and established E & P service providers meeting the prequalification criteria as mentioned below for empanelment /short listing of contractors for issue of tender document for supply of rig package for drilling five (5) numbers of wells in the … block: ….. 2.0 PROJECT INFORMATION: … being the operator in the above mentioned … block, has to drill 5(five) drilling wells within the stipulated time frame. It is proposed to charter hire a drilling rig package of 2000HP (minimum) capacity to drill five (5) numbers of wells at various sites within the … block. 2.1 … has the most variegated hilly terrain in the … with 21 hill ranges of different altitudes (maximum altitude of around 1800m and in general 900 m to 1200 m) with succession of long valleys running mostly from North to South covering the entire state. The hills are very steep and rugged with intervening deep gorges. Two major roads namely … and State Highway funded by … run almost parallel to each other in North–Southern direction through the center of the state as well as … block. Both the roads emanate from … and converge at …, the second largest town in … These two highways will serve as the major feeders for any drilling locations within the … block. The roads are in hilly terrain full of sharp curves with steep gradient. The other connecting roads are narrow having sharp horizontal curves with steep gradient in many places. 3.0 GEOLOGY OF THE AREA: …. …. 4.0 LOCATION OF THE AREA: …. 5.0 BRIEF SCOPE OF WORK: Drilling of five (5) numbers of onshore exploratory wells of depth ranging from 4000m to 5300m through charter hire of a 2000 HP (minimum) drilling rig package including a suitable Effluent Treatment Plant (ETP) for an initial period of 2 years with provision of extension by one more year at the same terms and conditions, in high dip angle thrust belt area in hilly terrain involving difficult logistics in the …. The roads leading to the drilling locations are in hilly terrain with sharp turning and steep gradient where the maximum single load with
  • 13. 13 Market Entry Strategy, Questions and answers Sample Tender for Drilling Project carrier/trailer should not exceed 35 MT for transportation. 6.0 DRILLING RIG: 6.1 The vendor shall have to be in possession of the rig to be offered either owned or leased. In case, the vendor is not in possession of the rig at the time of submission of EOI, they may offer a rig for which they intend to have an agreement for lease/buy. 6.2 The horsepower rating of the rig should be minimum 2000 HP. Further, the rig should be Diesel Electric, having self-elevating mast and sub-structure (as per API standard) and also suitable for cluster location (1 + 1 Wells). Spacing between wells at surface on cluster well plinth is 15m (approx.). The rig would have to be equipped with proper effluent treatment plant. The vendor should have access to suitable top drive system which can be mobilized and fitted to the offered rig if required on call basis. 6.3 The Rig should not be more than 7 years old as on the bid closing date. 6.4 Further, the drilling unit should have a residual life of 7 years as on the bid closing date. The inspection and certification regarding the residual life of the rig should be done by any of the following inspection agencies: (a) DNV (b) ABS (c) BV (d) LLOYDS (e) Oilfield Audit Services 6.5 The transportation of rig package to the drilling locations will be the responsibility of the vendor. Because of difficult logistics it is suggested that the transportation of the rig package might have to be done in such a way that single consignment should not be more than 35 MT including the weight of the carrier. Additionally, the vendor may decide upon the length of the carrier. 7.0 MANPOWER The vendor must have the key personnel with requisite experience and qualification as specified in Annexure-I. The Area Manager/Rig Superintendent, Tool Pusher, Tour pusher, Driller and Asst. Driller should possess valid International Well Control Forum (IWCF) certificate at appropriate levels and should be fluent in English. 8.0 SAFETY COMPLIANCE: The vendor shall have to comply with the applicable and prevailing provisions of …
  • 14. 14 Market Entry Strategy, Questions and answers Sample Tender for Drilling Project 9.0 PRE-QUALIFYING CRITERIA: 9.1 The vendor must fulfil the following minimum pre-qualifying criteria for empanelment / short-listing for issue of tender documents for charter hire of 2000 HP (minimum) rig package. 9.2 The vendor must have the following experience during the last 7 (seven) years as on bid closing date: (i) Minimum one year continuous experience of providing drilling services with minimum 2000 HP rig capacity on charter hire basis. (ii) Drilling of at least 5 (five) nos. oil/gas wells with drilling rig of minimum 2000 HP capacity out of which one well should be of depth range 4000 m (minimum) and one well must be in fold belt area. 9.3 Average annual financial turnover as per Audited Annual Reports during the last 3 years (ending 31.03.2011) shall be at least ` or US$ 7.65 Million. 9.4 The average net profit of the vendor as per the past three years audited accounts need to be positive. 9.5 In case, the vendor is consortium of companies, the Leader of the consortium should satisfy the minimum experience requirement as per Para … 9.2 Above. However, any one of the consortium members individually shall have to meet the financial turnover criteria mentioned in Para 9.3 above. Additionally, all the consortium members shall individually meet the criteria mentioned in para 9.4 above. 9.5.1 Legally acceptable Memorandum of Understanding has to be made between the consortium members duly signed by the authorized executives of the consortium members clearly defining the role/scope of work of each partner/member, binding the members jointly and severally to the responsibility for discharging all obligations under the contract, if awarded, and identifying the Leader of Consortium. Unconditional acceptance of full responsibility for executing the “Scope of work” of the bid document by the Leader of the Consortium shall be submitted along with the technical bid (in the event of issue of tender). 9.5.2 Only the Leader of the consortium shall submit bid (in the event of issue of tender) and sign the contract agreement (in the event of award of contract) on behalf of the consortium. 9.5.3 The Bid Security from the Bank (as specified in the tender document) shall be in the name of the Leader of the consortium on behalf of consortium with specific reference to consortium
  • 15. 15 Market Entry Strategy, Questions and answers Sample Tender for Drilling Project bid and name & address of consortium members in the event of issue of tender document. Similarly the Performance Security (as specified in the tender document) shall be in the name of the Leader of the consortium on behalf of the consortium in the event of award of contract. 9.6 In case, the Bidder is an …. Company/… joint venture Company, either the … Company/… Joint Venture Company or its technical collaborator/joint venture partner should meet the criteria laid down at para 9.2 above. However, the …. Company/… Joint Venture Company must meet the financial turnover criteria mentioned in Para 9.3 above. 9.6.1 … bidders quoting based on technical collaboration/joint venture, shall submit a Memorandum of Understanding/Agreement with their technical collaborator/joint venture partner clearly indicating their roles under the scope of work which shall also be addressed to OIL and remain valid and binding for the contract period under this tender. 9.6.2 Any party who is extending technical support by way of entering into technical collaboration with another party, shall not be allowed to submit an independent Bid against the tender and such bids shall be rejected straightway. Further, all bids from parties with technical collaboration support from the same Principal will be rejected. 10.0 INFORMATION & DOCUMENTS: 10.1 The vendor must furnish the following in support of fulfilling all the above pre-qualifying criteria: (a) Rig offered – documents relating to rig already in possession or propose to own / lease along with brief technical specifications. (b) Drilling experience of vendor – Statement to be furnished by vendor in a tabular form as per Annexure-II along with copies of contracts / work orders, completion certificates / payment certificates issued by the clients. (c) Financial turnover of vendor as per Annexure-III along with Audited balance sheets / profit and loss accounts etc. (d) MOU or legally acceptable documents in support of consortium arrangements / technical collaboration / joint venture arrangements, if any. (e) A letter with categorical confirmation that the vendor shall provide key personnel as indicated vide Annexure-I and shall deploy for drilling operation (in the event of award of contract). 10.2 Details of current work in hand and other contractual commitments of the vendor are to be submitted in a tabular form as per Annexure-IV along with copies of contracts/work order.
  • 16. 16 Market Entry Strategy, Questions and answers Sample Tender for Drilling Project 10.3 Vendor while submitting the documents in support of their experience vide Clause 9.0 above shall also submit details of experience of the Leader of the consortium on works/jobs done of similar nature in the past along with the EOI, in case the vendor is consortium of companies. 10.4 All documents submitted with the EOI must be self-certified by the vendor’s authorized person indicating clearly name & designation of the person. Note: (i) All the copies of document submitted along with the EOI should be clear & legible. (ii) … reserves the right to physically check the original documents/certificate, copies of which are submitted along with the EOI. (iii) The EOI is liable to be ignored in case of submission of any misleading/false representation by the vendor in the form, statements and attachments. (iv) … reserves the right to ignore any or all EOIs without assigning any reason thereof. (v) … reserves the right to curtail/ enhance the scope of the work stated above or cancel, if required, without assigning any reason thereof. 11.0. SUBMISSION OF EOI The EOI together with the information/documents as mentioned above should be submitted in a closed envelop superscribing “ EOI for Charter Hire of 2000 HP Drilling Rig for NELP block in Mizoram” and must reach the following address on or before … Annexure-I of Tender 1. AREA MANAGER / RIG MANAGER/ RIG SUPERINTENDENT A. Qualification: Graduate in Engineering / Science or three years Diploma in Engineering. B. Experience: i) should have work experience in deep drilling oil / gas wells, for minimum 10 years, of which at least 5 years should be in a senior management level. ii) Should be conversant with working in diesel electrical rigs/supplied rig. iii) Should be conversant with mud chemicals & maintenance of mud property. iv) Should have completed at least one gas well of minimum 4000m depth. v) Should have completed one well in fold belt area. C. Certification/License/ Health: i. Must possess valid well control certificate (IWCF-Supervisor Level) and should be conversant with well control methods to take independent decisions in case of well emergencies. ii. Should be of sound health to work in adverse weather condition in drilling well.
  • 17. 17 Market Entry Strategy, Questions and answers Sample Tender for Drilling Project 2. TOOL PUSHER: A. Qualification: Graduate in Engineering / Science or three years Diploma in Engineering. B. Experience: i. Should have work experience in deep drilling oil / gas wells, for minimum 10 years, of which at least one year as tool pusher in exploratory & development wells. ii. Should be conversant with working in diesel electrical rigs/supplied rig. iii. Should be conversant with mud chemicals & maintenance of mud property. Should have completed at least one gas well of minimum 4000m depth. Should have completed one well in fold belt area. Certification/License/ Health: Must possess valid well control certificate (IWCF-Supervisor Level) and should be conversant with well control methods to take independent decisions in case of well emergencies. ii. Should be of sound health to work in adverse weather condition in drilling well. 3. TOUR PUSHER / NIGHT TOOL PUSHER: A. Qualification: Graduate in Engineering / Science or three years Diploma in Engineering. B. Experience: i. Should have work experience in deep drilling oil / gas wells for minimum 7 years in drilling, out of which at least one year as tool / tour pusher of exploratory & development wells. ii. Should be conversant with working in diesel electrical rigs/supplied rig. iii. Should be conversant with mud chemicals & maintenance of mud property. . Should have completed at least one gas well of minimum 4000m depth. . Should have completed one well in fold belt area. C. Certification/License/ Health: Must possess valid well control certificate (IWCF-Supervisor Level) and should be conversant with well control methods to take independent decisions in case of well emergencies. ii. Should be of sound health to work in adverse weather condition in drilling well. 4. DRILLER: A. Qualification: Graduate in Science or three years Diploma in Engineering. B. Experience:
  • 18. 18 Market Entry Strategy, Questions and answers Sample Tender for Drilling Project i. Should have work experience in deep drilling oil / gas wells for minimum 5 years out of which at least one year as Shift In charge / Driller of exploratory & development wells. ii. Should be conversant with working in diesel electrical rigs/supplied rig. iii. Should be conversant with mud chemicals & maintenance of mud property. Should have completed at least one gas well of minimum 4000m depth. Should have completed one well in fold belt area. Certification/License/ Health: Must possess valid well control certificate (IWCF-Driller Level) and should be conversant with well control methods to detect well kick, shut the well and assist Tool Pusher/ Tour Pusher in case of well emergencies. ii. Should be of sound health to work in adverse weather condition in drilling well. 5. ASSISTANT DRILLER: A. Qualification: SSC/HS/PU/I. Sc. or equivalent B. Experience: i. Should have work experience in deep drilling oil / gas wells for minimum 4 years out of which at least one year as Asst. Driller / Head-man of exploratory & development wells. ii. Should be conversant with working in diesel electrical rigs/supplied rig. iii. Should be conversant with mud chemicals & maintenance of mud property. Should have completed at least one gas well of minimum 4000m depth. Certification/License/ Health: Must possess valid well control certificate (IWCF-Driller Level) and should be conversant with well control methods to detect well kick, shut the well and assist Tool Pusher/ Tour Pusher in case of well emergencies. iii. Should be of sound health to work in adverse weather condition in drilling well.
  • 19. 19 Market Entry Strategy, Questions and answers ENDNOTES i Contact us for full report on Iran Oil & Gas Drilling Salary Report ii Contact us For full report on the future drilling projects, Iranian drilling contractors and statistical analysis and forecast iii For full report on the Iranian drilling contractor’s productivity, financial situations and performances contact us. iv Contact us for full “contractor and or for leasing the onshore drilling rig (pre) qualification criteria” which is issued by NIOC and its subsidiaries v Refer to this web link for sanctioned entities. vi Contact us for the detailed available scope of services, list service providers and estimated costs vii For detailed report on available drilling services contact us.