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ONGC to buy 27 rigs for up to Rs3,500cr

Maharatna PSU ONGC is planning to purchase 27 drilling rigs to replace about half of its ageing oil rigs in a deal that would cost Rs3,000-3,500cr. The state-run explorer has floated a tender to seek bids from interested suppliers by November 14.

Thus, ONGC was earlier planning to buy over 50 rigs; however, they cut down their target to 27. What’s more, these new purchases will allow it to partly replace its long-standing fleet, currently operating at its onshore fields. The CPSE always owns onshore rigs and does not believe in hiring them, mainly due to their scarcity. Conversely, offshore rigs are always hired due to their adequate availability.

ONGC accounts for ~70% of India’s oil and gas production. Thus, this move of new purchases is also in line with its plans to step up its oil and gas output that has been stagnant for years. It is important that steps are taken in this direction as soaring crude prices and sharp depreciation of the rupee have pushed up India’s crude bill, hurting the economy.

The company’s stock is currently trading at Rs149.10 up by Rs0.45 or 0.3% from its previous closing of Rs148.65 on the BSE.
The scrip opened at Rs147.70 and has touched a high and low of Rs153.45 and Rs147 respectively. So far 32,30,117 (NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs1,90,766.04cr.
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