Schlumberger wins ONGC contract despite Baker protest

Vol 16, PW 6 (04 Oct 12) Exploration & Production

Schlumberger has won a bitterly fought one-year contract to hire out a well stimulation vessel to ONGC for work on the eastern offshore amid a furious row with runner up Baker-Hughes-owned BJ Services.

PETROWATCH learns Schlumberger received a Letter of Award (LoA) despite protests from rival BJ for the $30.6m contract on September 24. BJ, we hear, complained to ONGC’s Independent External Monitors (IEMs) but the three IEMs dismissed its protest on September 21.

Cut to April 16 when ONGC invited a limited tender from Schlumberger, BJ and Halliburton for a stimulation vessel with a coil tubing unit for ‘acidisation’ and ‘hydrofracturing’ work at two eastern offshore High Pressure/High Temperature wells. Only Schlumberger and BJ took part, with ONGC opening price bids on August 10.

BJ bid lowest at $31.8m while Schlumberger quoted $34.6m. But all 12 vessels from BJ were foreign-flagged, while one of three from Schlumberger was Indian-flagged Greatship Ramya.

Luckily for Schlumberger, shipping ministry rules say Indian vessels have ‘right of first refusal’ and preference over foreign-flagged vessels. ONGC asked Schlumberger to slash its rate to match BJ’s rate of $31.8m if it wanted the contract.

But during negotiations, ONGC was able to bring Schlumberger down to $30.6m. Shocked, BJ complained to the IEMs in writing on August 31 with two arguments: first, shipping ministry rules apply only to Indian bidders offering Indian-flagged vessels and that these rules apply only to the vessel, not to services; two, that Greatship Ramya is just a platform supply vessel on which well stimulation equipment could be mounted and not a specialised stimulation vessel.

BJ said Schlumberger should not be allowed to win the contract for vessel plus services. But its pleas fell on deaf ears.