Questions over $2bn tender at 98/2 from ONGC

Vol 19, PW 22 (14 Jul 16) Exploration & Production

Many are asking if ONGC has made a huge mistake by deciding to issue a single $2bn composite tender for subsea facilities at its eastern offshore gas discovery block KG-DWN-98/2 instead of breaking it up into separate tenders.

ONGC directors on July 6 decided to issue a single tender for both a subsea production system (SPS) and subsea umbilicals, risers and flowlines (SURF). Before taking this decision, ONGC director offshore TK Sengupta chaired a June 10 meeting in Delhi, attended by other ONGC directors, to listen to presentations by several companies on whether a composite tender or two separate tenders should be issued.

Presentations were made by Technip partnering FMC, Subsea 7 with OneSubsea, Saipem with Aker Kvaerner, and GE with McDermott International. After the presentations ONGC told companies it will discuss the matter and decide.

Some fear it has made the wrong decision as it will be too dependent on a single contractor for the entire project. Conversely others feel ONGC has made things easier.

"In a composite tender, ONGC won't have to liaise between multiple contractors," says a source. "Everything will be done by a single contractor.

" ONGC's own rationale is that it stands to save around $300m and two or three months time with a composite tender. ONGC supporters say it is drawing on lessons from the S1-Vashishta field development where it bought equipment from GE and issued it to McDermott and L&T for installation and commissioning.