NPCC wins WO-16 re-tender with $149.85m bid

Vol 15, PW 13 (12 Jan 12) Exploration & Production

Many believed ONGC was making a costly mistake by opting to re-tender for the prestigious WO-16 marginal fields production platforms contract.

But it seems they were wrong. When ONGC’s offshore division opened price bids on December 16, it was shocked to discover Abu Dhabi-based National Petroleum Construction Corporation (NPCC) had emerged lowest bidder, quoting just $149.85m.

NPCC’s rock-bottom rate was far below ONGC’s own $220m internal estimate for the job, which includes setting up four well-head platforms and processing facilities at the offshore Mumbai WO-16 fields. NPCC also spoiled the party for Houston-based J.

Ray McDermott, widely expected to win. McDermott again quoted the same $164.25m rate it offered in the original WO-16 tender, where it was disqualified for prematurely revealing its low price bid.

Close behind was Leighton Contractors quoting $165.84m, while Larsen & Toubro came last with $177.24m. ONGC wasted no time and issued a Letter of Intent (LoI) on December 21 to NPCC, which has since begun engineering work for the project.

Rival contractors claim NPCC will make a loss on the project, given its low rate, but an NPCC supporter dismisses such concerns. “NPCC managed to bid so low because it will be doing the entire project in-house and won’t subcontract any work,” he says.

“NPCC has its own manufacturing yard, barges and other equipment.” Another source says NPCC chose to bid low as it desperately needed the contract to keep its Abu Dhabi workforce busy.

“NPCC has no major contracts in hand for the period from April 2012 to August,” says a source. “Without the WO-16 project, it would have been forced to keep its 4000 workers idle or send them away on a long vacation.

” NPCC is expected to begin building the WO-16 platforms this April so it can meet ONGC’s project completion deadline of May 15, 2013.