Halliburton wants UBD 'Purchase Preference'

Vol 25, PW 11 (05 May 22) Exploration & Production

Halliburton has denied wrongdoing amid allegations that foreign oilfield service providers are evading the government's directive to promote Indian companies in low-value tenders from state-owned companies like ONGC.

On April 11 (2022), ONGC received a complaint from Allahabad-based lawyer Vivek Tiwari alleging that "certain foreign companies" are using fraudulent means to set up cartels with other companies to take advantage of the government’s Purchase Preference Policy. On April 19 (2022), ONGC wrote to Tiwari asking for "details of specific cases wherein such instances have occurred as mentioned in your letter to enable us to examine the issue in detail further."

Confirming receipt of ONGC’s letter, Tiwari tells this report he will take "further instructions" from his client for the next course of action. Under scrutiny is an ONGC tender for Under Balanced Drilling (UBD) at seven wells in the Heera field offshore Mumbai, where US contractors Halliburton and Air Drilling Associates bid on March 14 (2022) for an estimated Rs190cr ($27m) contract.

As the project value is less than Rs200cr ($28m), this should have been issued as a domestic tender under government policy to boost local companies. But UBD services are not locally available, so ONGC secured government permission to publish a global tender.

Halliburton is reported to have bid as a Class-1 Local (Indian) Supplier, meaning its bid must include a minimum of 50% domestic Indian content, certified by a Chartered Accountant. This would enable it to benefit from the government’s amended Purchase Preference Policy, released by the oil ministry on November 17 (2020).

Any bidder claiming under this policy and whose price is up to 20% higher than the lowest bid will get the contract if it can match the lowest bid. Questions are being raised over Halliburton claiming this preferential status as a Class-1 Local (Indian) Supplier because it allegedly plans to import all equipment and personnel for the project, as it has in the past.

According to an ONGC source, Halliburton intends to apply to the DGH for an Essentiality Certificate to import its equipment duty-free. When contacted, a senior Halliburton source denied any wrongdoing, stressing that ONGC checks for local content.

"All local spend on salaries, logistics, and engineering qualifies as local content," he said. "We are scrupulously following the policy, and if there’s a default, ONGC can encash our bank guarantee."