McDermott beats NPCC in ONGC Cluster 7 tender

Vol 15, PW 5 (08 Sep 11) Exploration & Production

Houston-based J.

Ray McDermott has surprised the market with its low rates in two unrelated ONGC offshore construction tenders. When ONGC opened price bids on August 24 in its tender to construct five unmanned well platforms at the Cluster 7 marginal fields offshore Mumbai, McDermott was the lowest bidder quoting just $160m.

Second-ranked bidder Abu Dhabi-based National Petroleum Construction Corporation (NPCC) was far behind with a quote of $193m. NPCC was widely expected to win this contract as it has all the necessary skills and capabilities under one roof.

“McDermott hasn’t been involved with ONGC contracts for 10 years,” says an analyst. “Its quote was a surprise.

” McDermott nearly repeated this performance in another ONGC tender for the offshore Mumbai WO-16 marginal fields. Sadly, it made a costly mistake by openly indicating its $164m price for the job in the technical bid submitted to ONGC on July 14, leading to its instant disqualification.

ONGC rules strictly ask bidders to indicate prices only in sealed bids submitted separately. When ONGC opened WO-16 price bids on August 30, a consortium of Hyderabad-based SEW Infrastructure and Malaysia’s Ramunia emerged lowest bidder quoting $191.9m to set up four wellhead platforms, ‘processing facilities’ and 113-km of connecting pipelines.

Again, NPCC came second quoting $195.78m. Unsurprisingly, McDermott executives want ONGC to excuse its mistake.

ONGC cannot totally ignore McDermott’s request, adds an observer, as the company’s quote is nearly $30m lower than SEW. “ONGC might negotiate SEW down to McDermott’s price or ask all bidders for fresh sealed price bids, then open these bids in order of their present ranking,” we learn.

“It did something similar in 2006 for a jack-up tender and in 2007 for a ‘modular rigs’ tender.” ONGC might also decide to scrap the WO-16 tender altogether and invite fresh bids.

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