Leighton undercuts rivals in ONGC platform tender

Vol 15, PW 15 (09 Feb 12) Exploration & Production

Leighton Welspun Contractors is defending its rock-bottom quote in a keenly fought ONGC tender to modify platforms at the western offshore Heera field.

PETROWATCH learns Leighton, the Indian arm of Australia’s Leighton Holdings Group, was lowest bidder for the Heera contract after ONGC opened price bids in Mumbai on January 23, quoting just $8.39m. Shocked competitors point out this is far below ONGC’s own $21.9m estimate for the assignment.

Great Offshore ranked second after Leighton, quoting $11.37m, while Dolphin Offshore came third quoting $11.43m. “I can’t figure out how Leighton can make money from this contract,” says a rival.

“A difference of up to 10% between Leighton and the next bidder would be understandable, but not this kind of gap! Nonetheless, ONGC will be more than happy to give them the LoI (Letter of Intent) at the earliest!” Another dismayed bidder says the cost of ‘materials’ alone works out to at least $7m. “Maybe Leighton hired some (incompetent) new employees who didn’t realise they were making a huge mistake,” he speculates.

“They seem to have an unrealistic idea of offshore costing.” ONGC, he adds, wants ‘clamp on structures’ and ‘production-related modifications’ at three Heera field platforms where it plans to drill 10 additional wells: platforms HJ, HZ and HG.

“ONGC’s internal $21.9m estimate for the job seems right,” we hear. “At least it’s more in line with the ‘scope of work’, which includes ‘piping’, ‘valves’, ‘instrumentation’ etc.

” Another bidder speculates Leighton stands to make a loss of around $6m on this contract. “Maybe Leighton wants to subsidise ONGC,” he adds sarcastically.

When contacted, a Leighton source defended its bid. “We don’t think we’ve made any mistake,” he said.

“What might appear a low price to you is not low for us.” But he declined to elaborate.

“Let’s leave it at that! Once we get the LoI from ONGC, we’ll implement the project.”