L&T wants to replace sunk N-23 platform jacket

Vol 19, PW 15 (07 Apr 16) Exploration & Production

After wasting two months and millions of dollars trying to retrieve the sunken N-23 platform jacket from the Arabian Sea, Larsen & Toubro last month (March) gave up and asked vendors to quote for a new one.

ONGC, it seems, intervened and told L&T it would be better to build a new jacket than spend more money trying to retrieve this one which sunk on January 1 during installation of an unmanned wellhead platform at Mumbai High North by L&T sub-contractor Abu Dhabi-based NPCC. Marine warranty surveyors too felt it makes no sense to continue retrieval.

"For them the important thing is the level of damage sustained by the jacket and whether it is reusable," says a source. Another source believes a new jacket will cost $13m to build but with steel prices down the cost could fall to under $10m.

Still unclear is whether it will be L&T or subcontractor NPCC which pays for the new jacket construction, retrieval costs for the old jacket or the 10% liquidated damages penalty imposed by ONGC for delaying the project beyond March 31, 2016. "Also unclear is whether ONGC will calculate liquidated damages on the entire project value or proportionately on each platform," we hear.

Unhappily for L&T a jacket toppling into the sea during installation is not covered under the Force Majeure clause of its ONGC contract.