Disappointed NPCC loses ONGC tender to Pipavav

Vol 14, PW 13 (16 Dec 10) Exploration & Production
     

Age before beauty, they say, but for ONGC, being Indian trumps age, beauty and all other attributes.

Rank newcomer Pipavav Shipyard is set to walk away with one of ONGC’s largest offshore EPC projects this season because of the 10% price preference given to Indian bidders. When ONGC opened price bids on December 3 for its offshore Mumbai B-series platform tender, veteran Abu Dhabi-based National Petroleum Construction Corporation (NPCC) emerged lowest bidder.

NPCC quoted $227m and was well within ONGC’s internally estimated cost of $258m for this contract. But it hadn’t counted on youngster Pipavav quoting just $229m.

Under ONGC rules, Pipavav can now cut its own price by $2m to match NPCC and win the contract. When contacted, a disappointed NPCC source admits Pipavav is likely to claim the price preference.

“I don’t know what will happen,” he laments, “and whether ONGC will accept it.” If it wins, Pipavav must provide four well-head platforms with a minimum three slots each for the B-46, B-48, B-105 and B-188 fields.

It must also provide two well-head platforms at the N15 and N16 Mumbai High North fields. This will be Pipavav’s first offshore platform project for ONGC and it has much reason to celebrate.

As the project is exempt from customs duty, foreign companies like NPCC were believed to have a clear advantage over Indian rivals as they could take advantage of ‘economies of scale’ and submit low bids. Nobody imagined Pipavav would upset these plans.

Other Indian companies also made a good effort – L&T quoted $275m while Punj Lloyd was not far behind with $284m. Singapore’s Swiber was further off with a quote of $309m while an alliance of AFCONS and Indonesian partner Gunanusa lagged with $360m.

Bringing up the rear was Great Offshore with $386m.