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Loan guaranteed for drilling rig

Loan guaranteed for drilling rig
Greatship Global Energy Services Pte Ltd this week secured a $140 million (Rs671 crore) loan to pay for a new oil drilling rig.

Greatship Global Energy Services Pte Ltd this week secured a $140 million (Rs671 crore) loan to pay for a new oil drilling rig.

In a sign that the liquidity crunch is easing for the shipping industry, Greatship Global Energy Services Pte Ltd this week secured a $140 million (Rs671 crore) loan to pay for a new oil drilling rig. Greatship Global is the Singapore-based rig-owning subsidiary of Great Eastern Shipping Co. Ltd, or GE Shipping, India"s biggest private ocean carrier.

?The message is that for good projects and good names, money is available,? said G. Shivakumar, chief financial officer, Great Eastern Shipping.

This is one of the biggest asset purchase loans secured by an Indian shipping company since the liquidity crunch that started in September last year.

The lack of funds delayed plans for many Indian fleet owners to buy new ships and expand capacity.

The loan is being offered by a consortium of banks that includes Bank of Nova Scotia, DBS Bank Ltd, Thanachart Bank Public Co. Ltd and Axis Bank Ltd, Shivakumar said. Greatship Global will use the money to finance the purchase of a rig named Greatdrill Chitra, costing $205 million.

State-owned Oil and Natural Gas Corp. Ltd, India"s biggest oil explorer, has hired the rig on a five-year contract beginning 31 December at a day rate of $139,320. This will fetch Greatship Global about $254 million over the five years.

?The loan deal shows that the situation is improving,? said Navindar M., an analyst at Mumbai-based brokerage Natverlal and Sons Stockbrokers Pvt. Ltd. ?The biggest comfort for the banks is the firm contract for the rig. In this case, the rig is fully employed over the five-year tenure of the loan.?

The rig is in the final stages of construction at Singapore"s Keppel FELS Ltd, the world"s biggest builder of offshore oil drilling rigs by capacity, and will be delivered in October.

Globally, demand for oil drilling rigs slumped after benchmark Brent crude prices plunged to below $40 a barrel, from an all-time high of $145.66 a barrel on 3 July 2008.

?But in India, a country with very few fields being fully explored, demand will pick up as the government is auctioning more oil blocks for exploration,? Navindar said.

Greatship (India) Ltd, the offshore oilfield services subsidiary of Great Eastern Shipping, owns and operates 14 vessels, including a rig used for drilling oil. It has ordered 14 more vessels of various types, including Greatdrill Chitra, from global yards involving an investment of Rs3,361 crore.

www.TurkishMaritime.com.tr

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