HAL finally gets Sobhasan and Linch LoAs
After months of waiting, Mumbai-based HAL Offshore has finally received LoAs from ONGC to redevelop the mature Linch and Sobhasan fields at the Mehsana asset in Gujarat.
On September 29 (2023), HAL's vice-president commercial, Naveen Mohta, received the Linch field redevelopment LoA from Niraj Kumar Bansal, the materials management head of ONGC's Delhi-based onshore engineering services department. ONGC will pay Rs498.65cr ($71m) for the EPC part of the project, including all taxes, plus Rs68.53cr ($9.8m) for Operations and Maintenance (O&M) for seven years.
HAL must submit a Performance Bank Guarantee (PBG) worth Rs17cr ($2.4m), equivalent to 3% of the total contract price, by October 14 (2023). Within 30 days, HAL must sign a formal contract with ONGC and complete the project within 22 months or by July 29 (2025).
When ONGC opened the Linch price bids on January 13 (2023), HAL bid lowest at Rs547cr ($78m) for the project's EPC part, which was still 30% higher than ONGC's budget. HAL agreed to reduce its price to Rs498.65cr, while ONGC needed internal approval to increase its budget to accept this offer.
Also, on September 29 (2023), ONGC awarded a LoA to HAL worth Rs767.22cr ($109m), including taxes for the Sobhasan redevelopment. HAL must submit a PBG of Rs23cr ($3.2m) within 15 days or by October 14 (2023) and sign a formal contract within 30 days.
Work must be completed within 22 months or by July 29 (2025). HAL's rivals for the Linch contract were Oswal Infrastructure with Nagpur-based SMS, which quoted Rs615cr ($87m); Megha Engineering with Rs648cr ($92m); and Kalpataru Power with Toshiba Water Solution & Services, which quoted Rs850cr ($121m).
At Linch, ONGC wants 187 old development wells networked with 32 new oil producers, two water injector wells, and four effluent disposal wells. After the redevelopment, ONGC expects Linch to produce an additional 8.2m barrels (1.15m tonnes) and 0.291bn cubic metres by 2040.
ONGC opened Sobhasan price bids on March 31 (2023), and the lowest bidder HAL quoted Rs767.22cr ($109m), which is the value of the LoA it received on September 29 (2023). However, the LoA was delayed because second-ranked JSC Golla Engineering pointed out HAL offered 0.7% local content, relegating it to a Class 2 contractor.