Foster Wheeler contract for Ennore in doubt

Vol 16, PW 17 (21 Mar 13) Midstream & Downstream

IndianOil looks set to cancel the expected appointment of Foster Wheeler as its consultant for a proposed 5m t/y LNG terminal at Ennore.

When bids were opened on November 12 last year, Foster Wheeler quoted $10.7m - the lowest - and was widely expected to win the contract. Yet the award is now in jeopardy.

"We have not taken a final decision," confirms IOC. "A decision will be taken within three weeks.

" Market whispers suggest IOC is unhappy with Foster Wheeler's performance at the separate Paradip refinery construction in Orissa, where it is consultant. Paradip was slated for commissioning by March 2012, but is beset by chronic cost and time overruns.

Fierce criticism has been levelled at IOC for the delay, which it blames squarely on Foster Wheeler, saying it took too long to carry out detailed engineering and to line up EPC contractors. Frequent strikes and protests haven’t helped, resulting in the loss of 350,000 days of productivity.

IOC now believes the Paradip refinery is unlikely to be commissioned before May 2014. IOC is also unhappy because Foster Wheeler is involved in arbitration proceedings over Paradip.

A rival bidder for the Ennore PMC contract offers a different reason why IOC won’t award the Ennore job to Foster Wheeler. “Any company which did the FEED study is not eligible to bid for the PMC contract,” he says.

“Foster Wheeler’s Indian subsidiary did the FEED study for Ennore and its Spanish subsidiary bid for the PMC contract. Legally they are two separate entities but technically they are the same.

” Repeated calls to Foster Wheeler director commercial Harsh Krishnatray were unreturned.