Expect FPSO tender for 98/2 by December 2016

Vol 20, PW 3 (20 Oct 16) Exploration & Production

Around the world there are nearly 300 Floating, Production, Storage and Offloading (FPSO) units in operation but in India there are only two: one at ONGC's west coast D1 marginal field and the other at KG-DWN-98/3 operated by Reliance.

Now ONGC is preparing to issue a tender by early December to hire a third at eastern offshore deepwater block KG-DWN-98/2 where it wants to begin producing first free gas from June 2019 and first oil with associated gas from March 2020. ONGC is scheduled to hold an EoI meeting on October 21 at its Eastern Offshore Asset office in Kakinada.

Among companies expected to attend are Japan's MODEC, Malaysia's Bumi Armada with India's Shapoorji Pallonji, Norway's BW Offshore and Netherlands-based SBM Offshore. But they will have to lower their expectations.

When ONGC first floated the FPSO idea two years ago the estimated contract cost was more than $1.5bn. "But now with the global slowdown in E&P activity, the value is around $1bn," says a likely bidder.

Still, expect plenty of competition as ONGC is one of the only companies investing in E&P in the Asian region. A source adds ONGC did its homework thoroughly before issuing the EoI notice on October 10.

Two ONGC teams went separately to Houston and Brazil to get technical information for the tender in September.