Sapura awarded C-26 work while Swiber fumes

Vol 20, PW 11 (23 Feb 17) Exploration & Production

After initial hesitation, ONGC has awarded part of the controversial C-26 pipeline project to Malaysian contractor SapuraKencana amid vocal opposition from original Singapore-based contractor Swiber.

On February 15, ONGC's Executive Purchase Committee awarded SapuraKencana the remaining subsea component of the C-26 project for $18m, negotiated down from the original $21.485m revealed when price bids were opened on January 27. ONGC also hired Das Offshore to complete the remaining topside portion of the project for $17m.

ONGC's decision has created a stir after it chose to ignore an offer from Swiber to complete both the subsea and topside work for less than $18m - in total. "ONGC must explain how it awarded a contract for $35m ($18m subsea + $17m topside) when it had an offer to the whole job for $18m?" exclaims a source.

Five days earlier (February 10) Bob Yap Cheng Ghee, the KPMG-employed judicial manager appointed by the Singapore High Court to oversee financially-stricken Swiber, wrote to ONGC director TK Sengupta imploring him to let Swiber finish the job. Under Clause 8.4.1 of its original contract with ONGC, Swiber is responsible for paying for the unfinished work.

How did ONGC exclude it from negotiations to get the best price from the replacement contractors? ONGC will now have to recover the $35m bill from Swiber. Can Swiber pay? Will it pay? It seems unlikely.

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