Tighter norms for offshore drilling — almost a certainty after the Gulf of Mexico disaster — may hit Chennai-based drilling major Aban Offshore.
This would be a double hit for the company which had lost Aban Pearl — a drilling ship — in Venezuela last month to an accident.
Last week, the United States interior secretary, Mr Ken Salazar, said the Obama administration has ordered a moratorium on further offshore drilling till the investigation into the BP accident was completed.
Mumbai-based brokerage house Ambit says the move would reduce drilling acitvity in the Gulf of Mexico, which accounts for almost 75 of the offshore drilling rigs and ships of
the 600 or so available globally.
A six month halt in drilling would push these ships to seek employment elsewhere — pushing the rates down, says the brokerage firm.
Secondly, tighter safety norms that may be implemented may require refurbishment of ships — that would push up costs. Insurance costs for ships may also rise because of two accidents close together.
This would be another blow for Aban that’s trying to deal with the slowdown in its business and the recent loss of its ship.
The company had a debt of over Rs 15,000 crore in March 2010, which it is trying to reduce by repayments and fresh fund raising.