ONGC calls off DUDP tender after months of negotiations with lowest bidder L&T
New Delhi: After months of negotiations with lowest bidder L&T, state-run Oil & Natural Gas Corp (ONGC) on Monday decided to call off the tender for its Daman upside development project (DUDP) off India’s western coast due to high quote beyond its approved limit.
“L&T had quoted $663.37 million which was 36.77 percent higher than ONGC’s revised internal estimate of $485.03 million. The tender has therefore been discharged and the project will now be unbundled into smaller contracts,” a company official said.
Subsequently, in February 2023, L&T offered a $1-million discount to ONGC, but the quote was still way above ONGC’s revised October 2022 estimate, he said.
Early last month, L&T officials met ONGC chairman Arun Kumar Singh to explain the causes behind its high bid but could only provide rationale for an additional $90 million over-run. That did not cut much ice with Singh, sources said.
Price bids for DUDP were opened on 16 December last year where second bidder AOGS Ltd — India’s Afcons with Indonesia’s Gunanusa Utama Fabricators — quoted $801.91 million for the offshore infrastructure required for the gas development project.
DUDP workscope includes four new wellhead platforms, seven infield pipelines, a new process gas compressor module and the addition of low-pressure compression at the existing process platform. It also includes topsides modifications at existing wellhead platforms.
The development is focused on the Tapti-Daman block in the Mumbai offshore, about 60 kilometres offshore, with gas flow from B-12 and C-24 marginal gas fields.
DUDP expansion is crucial to ONGC’s strategy of ramping up gas production from its shallow-water fields off India’s west coast. The project has been in the works for years but has been delayed on several occasions due to unfavourable gas pricing.
However, domestic gas prices in India have climbed steeply in recent months, turning the DUDP into a commercially viable proposition for ONGC.
ONGC is already producing natural gas from Daman and has spent an estimated $1 billion on offshore infrastructure at the field over the past five to six years.
Production began in 2016, with last year’s output reportedly averaging between 4 million and 5 million standard cubic metres per day of gas. ONGC claims that the project would deliver up to 10 MMSCMD of gas.
