ONGC hires Crystal Sea for Mumbai High North

Vol 9, PW 16 (17 Nov 05) Exploration & Production

ONGC has hired a Floating Production and Storage Offload (FPSO) unit from Jindal Drilling subsidiary Discovery Hydrocarbons as a temporary replacement of the Mumbai High North platform destroyed by fire on 27th July.

We understand the Letter of Intent was issued to Discovery on 8th November for a five-year contract. ONGC received techno-commercial bids on 4th November and price bids were opened on 7th November.

Only two companies submitted techno-commercial bids: Discovery Hydrocarbons and Norscot Oil and Gas. But Norscot did not qualify, as it could not bid a dynamically positioned FPSO as required by ONGC, unlike Discovery Hydrocarbons.

We hear Discovery quoted $99,200 per day for the five-year contract. Mobilisation and demobilisation charges are extra.

Discoverys rate is well below prevailing market rates of between $130,000 and $150,000 per day. Despite the low rate, ONGC insisted on a further reduction and bargained with Discovery to come down to about $96,000 per day.

Crystal Sea is one of two FPSOs owned by Norways Sea Tankers and can process 40,000 b/d and store 50,000 b/d. ONGC has clearly got a good deal.

But the whole process had some curious twists that did not show Crystal Seas Norwegian owners Sea Tankers in a good light. Three agents offered Crystal Sea simultaneously when ONGC first went to tender: Discovery Hydrocarbons, Norscot Oil and Gas and Malaysias M3nergy.

Bids were to be submitted by 28th October but ONGC extended the date by a week because Sea Tankers unexpectedly expressed a desire to bid directly. But by the new 4th November deadline, Sea Tankers vanished and only Discovery offered Crystal Sea.

It seems Sea Tankers was legally advised to stay away as it had signed an exclusive agreement with Discovery for ONGCs FPSO project. They wasted ONGCs and everybodys time, says a source.