Aban Offshore Falls Most in 18 Years After Rig Sinks (Update2)
May 14, 2010, 7:21 AM EDTBy Archana Chaudhary and Daniel Cancel
May 14 (Bloomberg) -- Aban Offshore Ltd., India’s largest oil rig company, fell the most in almost 18 years as Venezuela started investigating the sinking of a natural-gas platform leased by a unit to state-owned Petroleos de Venezuela SA.
Aban shares fell 18 percent to 832.25 rupees at the close in Mumbai, the biggest decline since July 17, 1992. The stock has dropped 35 percent this year compared with a 3 percent fall in the benchmark Sensitive Index.
PDVSA said a failure in Aban Pearl’s floatation system caused the rig to sink yesterday after a “massive” inflow of water. The incident occurred three weeks after the Deepwater Horizon oil rig, leased by BP Plc, exploded on April 20 in the Gulf of Mexico, and sank two days later, killing 11 workers.
“We need to see the technical reasons behind these two” accidents, said Nitin Bhasin, a Mumbai-based analyst at Execution Noble, who has a “sell” rating on Aban Offshore. “What will happen is that insurance premium for such assets may go up in the near term. Although there is a short supply of deepwater assets at the moment, over the next nine months, 28 deepwater rigs are coming into the market.”
Aban Offshore, based in Chennai, is assisting in finding the causes of the incident, the company said in a statement to the Bombay Stock Exchange today. C.P. Gopalkrishnan, deputy managing director of Aban Offshore, couldn’t immediately be reached for comment in Singapore. A.P.S. Sandhu, president of drilling, declined to comment, saying the incident didn’t fall under Indian operations.
Workers Safe
“We’re going to open an investigation into the causes behind this with the owners of the platform because this was an incident that happened very quickly,” Oil Minister and PDVSA President Rafael Ramirez said on state television. “The most important thing is that with the violence of the incident all of our workers are safe.”
Technicians avoided a leak by sealing the gas well with a security valve before the platform sank, PDVSA said in an e- mailed statement yesterday. The rig’s 95 workers were safely evacuated, Venezuelan President Hugo Chavez said earlier yesterday in a message posted on his Twitter account.
Chavez is trying to tap offshore gas reserves to power thermoelectric plants amid an energy crisis. Repsol YPF SA, Eni SpA and Chevron Corp. are also exploring offshore.
Venezuela, which has Latin America’s largest natural-gas reserves at 170 trillion cubic feet of gas, is certifying reserves and expects to reach 400 trillion cubic feet which would give it the fourth-largest reserves in the world, behind Russia, Iran and Qatar, according to BP data.
Ramirez said the platform sank at 2:20 a.m. local time and that the last few workers had to jump into the sea.
No Environmental Risk
PDVSA forecast production would reach 600 million cubic feet a day in the offshore area near Trinidad and Tobago where it is drilling for gas.
The PDVSA platform was leased from an Indian company, Aban Offshore Ltd., Ramirez said.
“Fortunately the well poses no environmental risks,” Ramirez said in an e-mailed statement from the Information Ministry.
Aban Pearl started drilling operations on Jan. 19, Aban Offshore said in a statement to the Bombay Stock Exchange on Jan. 22. Aban Offshore said in September 2007 it agreed with Bulford Dolphin Pte to buy the rig for $211 million.
A unit of Aban Offshore agreed to deploy the rig in Latin America for five years and the estimated revenue from the deployment was about 31.5 billion rupees ($699 million), Aban Offshore said in a statement Sept. 16, 2008.
Gulf Coast Threat
A Gulf oil well failed a pressure test hours before a drilling rig exploded last month, an executive for BP told the U.S. House Energy Committee that’s investigating the incident. The committee is investigating the explosion that triggered a spill that threatens the Gulf Coast from Louisiana to Florida with more than 3 million gallons of oil.
More than 5,000 barrels of oil a day have been leaking from the damaged well in the Gulf, 40 miles (64 kilometers) off the Louisiana coast and about 300 miles off Mexico’s Yucatan coast.
Chavez said on April 27 that the drilling in the Dragon gas fields, where the rig was located, is “historic” for PDVSA as it was the first offshore project developed by the company without foreign partners. “This is historic, because everything was done by PDVSA on its own,” he said. “We already have pipelines, remote- controlled robots and underwater technology that our PDVSA is doing on its own.”
‘Big Setback’
The accident will delay PDVSA’s plans to boost gas production, Diego Gonzalez, former head of the company’s natural-gas division, said today in a telephone interview from Caracas.
“This is a big setback for the company’s plans since the equipment is lost and they’ll have to hire another platform,” Gonzalez said.
Ramirez said that the $8.3 billion offshore project known as Mariscal Sucre, which includes the offshore Dragon fields, will proceed on schedule, and that a new platform should arrive within two months.
Venezuela is talking with potential partners including OAO Gazprom, Russia’s gas export monopoly, to develop the fields and produce and transport gas to onshore terminals by 2012.
Venezuela imports gas from Colombia to cover a deficit and to supply power and petrochemical plants in Western Venezuela. Chevron ships between 50 million and 200 million cubic feet of gas a day to Venezuela from Colombia, Ali Moshiri, the company’s head of exploration and production for Africa and Latin America, told reporters yesterday in Caracas.
--With assistance from Jim Efstathiou Jr. in New York, Joe Carroll in Chicago and David Wethe in Houston. Editors: John Chacko, Clyde Russell.
To contact the reporters on this story: Archana Chaudhary in New Delhi at
achaudhary@bloomberg.net; Daniel Cancel in Caracas at
dcancel@bloomberg.net.
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Fri May 14, 2010 7:52 am