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.