More competition demanded in FPSO tender

Vol 15, PW 11 (01 Dec 11) Exploration & Production

ONGC stands accused of unfairly restricting competition in its tender to hire a Floating Production Storage and Offloading (FPSO) unit at its Cluster 7 marginal fields offshore Mumbai.

About a dozen companies attended the November 18 pre-bid held at the Mumbai Cricket Association club house, among them Pipavav Shipyard and ABG Shipyard; Chennai-based Aban Offshore; state-owned Shipping Corporation of India (SCI); Singapore-based companies Rubicon Offshore International and Tanker Pacific Offshore Terminals; and Bumi Armada and M3nergy Delta, both from Malaysia. This was disappointing, as ONGC had sold 31 tender documents by November 3.

Potential bidders blame the weak turnout on ONGC’s strict eligibility criteria, particularly its insistence on at least five years FPSO experience. “ONGC usually only asks for three years qualifying experience,” says a likely bidder.

“This has worked well till now. So why is it asking for five years” Also worrying is ONGC’s demand that each technical collaborator of an otherwise unqualified bidder should submit a ‘performance bank guarantee’ equal to 5% of one year’s contract value.

More, the main bidder must also submit a bank guarantee equal to 10% of one year’s contract value. This is an outrageous demand, according to an industry source, and should be scrapped.

He explains ONGC normally only takes a performance bank guarantee from the main bidder, equal to 7.5% of one year’s contract value. Technical collaborators don’t usually submit bank guarantees at all.

Separately, Aban asked ONGC to club together its experience operating the Tahara Floating Production Unit (FPU) and the Endeavor Floating Storage and Offloading unit (FSO) at the PY-3 field offshore Chennai. It believes this work should count as a single FPSO to qualify it for the ONGC tender.

SCI wanted a minimum six months between the pre-bid and deadline but ONGC refused and wants bids by December 19.

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