Haggling

StatoilHydro Terminates Rig Tender for Norwegian Continental Shelf

"StatoilHydro is terminating its procurement process for rig hire for operations on the Norwegian Continental Shelf due to high rig rates.

"We focus on reducing costs and making strict priorities," said Anders Opedal, head of procurements in StatoilHydro.

The invitation to submit tenders for rig hire was distributed during the summer of 2008, and covered both semi-submersible mobile rigs and jack-up drilling rigs with contract start at the end of 2012.

When the deadline for submitting tenders expired on August 25, StatoilHydro had received tenders for a total of 28 rigs from 15 suppliers.

The rig rates have risen considerably the last years in a period of high oil price. From the invitation to tender was distributed and up to the present, the financial crisis has led to higher insecurity in the world economy, which has made the oil price drop by more than 60%.

Based on changed framework conditions StatoilHydro decided to ask for updated tenders from the suppliers to be submitted by December 1. The updated tenders included reduced rig rates.

"Despite the reduction in the prices offered, there is still a considerable gap between the tenders and the expectations we have concerning the rates," said Opedal. "We have therefore decided to terminate the procurement process.""