No compromise at ONGC over FPSO terms

Vol 19, PW 16 (21 Apr 16) Exploration & Production

Only two Floating Production Storage and Offloading (FPSO) vessels are in operation in India - one on the west coast at the D1 marginal field operated by ONGC; the other on the east coast at KG-D6 operated by Reliance and BP.

But soon there could be a third, if ONGC resolves disagreements with potential bidders and issues a tender for the long overdue KG-DWN-98/2 development. During a vendors meeting in Mumbai on March 29 and 30, contractors voiced unhappiness at ONGC's inflexibility.

ONGC invited contractors to express their views on its terms and conditions and held closed door meetings with each likely bidder. At issue are ONGC terms relating to wilful misconduct, gross negligence, limitation of liability, Force Majeure and pollution liability.

Contractors want 'wilful misconduct' to cover acts carried out only by their project manager or members of the onsite FPSO management team but ONGC wants it to cover acts by the most junior staff at site. As for financial liability, contractors want it limited to around 20% of the annual contract value but ONGC refuses.

Nor is ONGC ready to limit the extent of a contractor's pollution liability. On Force Majeure contractors want a wide range of situations covered.

Here again ONGC won't listen. In attendance was MODEC (Japan), Bumi Armada (Malaysia) with Shapoorji Pallonji (India), BW Offshore (Norway) and SBM Offshore (Netherlands).