New Delhi, March 8: Oil and Natural Gas Corporation (ONGC) and Shipping Corporation of India (SCI) have signed a memorandum of understanding for setting up a joint venture company, called Offshore Marine Services Ltd (OMSL), which will provide end-to-end solutions for vessel operations to ONGC and other oil and gas companies. The MoU was signed on Tuesday between ONGC chairman Subir Raha and SCI chairman S. Hajara.

According to a statement from ONGC, the joint venture company will also develop capabilities for acquisition, repair and maintenance of offshore floating units and undertake repair and construction under long-term arrangement with shipyards on preferential terms.

ONGC and SCI will each have a 24.5 per cent stake in the joint venture company.

PSA Marine of Singapore, a wholly-owned subsidiary of PSA International ? a Singapore government company, will also be a partner in the joint venture with a 21 per cent stake. PSA International will provide maintenance services and repair to vessels under the venture.

It is also proposed that financial institutions will have a 30 per cent stake in this non-PSU joint venture. ONGC will be the lead promoter in Offshore Marine Services.

Under the MoU, ONGC will give its vessels on bare boat charter agreement to the joint venture company and will retain the right of first refusal on deployment of these vessels. Offshore Marine will acquire, own, maintain, operate and charter wide range of offshore vessels. It will also be free to secure non-ONGC business, including acquisition of vessels and other assets. ONGC on its part will also have the option to acquire new vessels and put them in the joint venture company on similar agreement.

Since ONGC has stepped up its oil exploration and production activities both in the deep sea and shallow offshore areas, it requires an increased effort and more resources in the form of marine spread like offshore supply vessels, production supply vessels, anchor handling tugs-cum-supply vessels, multipurpose support vessels, crew boats, survey vessels and geo-technical vessels.

The other aspect is advancement in technology, which will require professional management to ensure efficient marine support, safety and security cover to offshore installation and logistics support.

Raha said ONGC’s core competence is in exploration and production activities, while SCI has a commendable track record in the marine industry. In the last 50 years, ONGC has realised the business benefits that can accrue from outsourcing services in certain spheres.