Swiber meltdown hits three big ONGC projects

Vol 19, PW 24 (11 Aug 16) Exploration & Production

ONGC is seriously worried about the impact of Swiber's financial predicament on three major unfinished offshore Mumbai projects worth a total $773m: the C-26 pipeline project; the Daman field development; and the Pipeline Replacement Project-IV (PRP-IV).

"These projects might go into limbo," admits a worried ONGC source. "As the monsoon has set in no offshore work is going on.

We've heard that Swiber's Mumbai office has shut down. Nobody is expecting work to resume anytime soon.

We can en-cash their bank guarantees but that's no solution." Industry sources add Swiber's Malaysian rival SapuraKencana is offering to step in and complete the three projects. Unfortunately the answer isn't so simple: ONGC is a bureaucratic nightmare.

Any transfer could take at least three months to evaluate the extent of the unfinished work, after which it must prepare the scope of work, float tenders, check bids and then award the project. "All this will take a year, given the pace at which ONGC works," adds a source.

Swiber narrowly avoided liquidation when its lawyers on July 29 applied for it to be placed under a court-approved rescue plan or 'judicial management.' This followed failure to sell $200m in preferential shares to London-based AMTC forcing it to take out $146m in bridge loans from financial services company DBS. Meanwhile, a small army of creditors continue to chase Swiber for debt repayments.

Questions are being asked why ONGC awarded these projects to Swiber knowing that its quotes were well below internal estimates and despite doubts about its net worth. Worst hit is the Daman project, worth $308m, where Swiber must install eight unmanned wellhead platforms, lay 101.5-km of subsea pipelines and modify topsides at two old platforms in two phases by March 30, 2017. By end-June 65% of the work was done against the scheduled 59.24%; ONGC has already paid Swiber 51% of the contract value. "Three platforms have been received and installed," confirms ONGC. "Five are under construction at the Petrovietnam yard (in Vietnam)." An industry source adds it is unlikely Petrovietnam will allow ONGC access to the platforms unless it clears outstanding bills. "Even if ONGC gets the platforms what will it do?" he wonders. "It will have to arrange a transportation and installation contractor!" For the C-26 pipeline job, 90% of the work is done. What remains is final tie-in and riser installation. At PRP-IV, 61% of the work is done against the scheduled 65%. "Unlike the other two projects, PRP-IV is not critical to production," says ONGC.

Swiber meltdown hits three big ONGC projects

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