ONGC’s Mumbai High pipeline tender comes at nearly one-third lower than sanctioned cost
New Delhi: Oil & Natural Gas Corp’s (ONGC) tender for purchase of bare line pipes for a pipeline replacement project in Mumbai High offshore has thrown a pleasant surprise: Ordering costs for 284.4-km of pipes were nearly one-third lower than its original sanction of $100.65 million.
The lowest bidders across various segments of seamless and LSAW pipes – varying in size and thickness – collectively quoted $70.45 million, 30.01 per cent lower than what ONGC had estimated in its Pipeline Replacement Project IX (PRP9).
Line pipes were sought for sizes varying from 6 inch to 18-inch diameter with different thickness and lengths starting from 1.5 km to 82.5 km.
The quantity ranged from 125.5 tonnes to 12,631.5 tonnes with total weight amounting to 38,400 MT. The quotes for 233.69 kms of seamless pipes were $53.20 million as compared to ONGC’s estimates of $67.11 million and that for 88.5 kms of LSAW pipes were $17.25 million versus $33.54 million.
This “significant discounts” was attributed to bulk procurement advantages, foreign exchange fluctuations, and current market conditions that allowed vendors to source materials at reduced rates.
“The significant discounts observed could also be attributed to bidders’ willingness to absorb lower margins in anticipation of future business opportunities, or due to current market conditions such as spare capacity available in their mills,” said ONGC.
“This market behaviour often results in quotations that are substantially lower than our cost estimates,” it added.
Sources said the tender was awarded to multiple vendors including Jindal Saw Pipes, Maharashtra Seamless and Kirloskar Ferrous Industries.
The PRP9 project involves two tenders: one for procurement of bare line pipes and another for transport and installation of the pipeline which was awarded to a consortium of UAE-based Lamprell Energy and Lamprell Saudi Arabia for $590.5 million. PRP9 will transport crude oil and natural gas from producing fields in Mumbai High, Neelam, Heera and Bassein & Satellite fields. The project completion date is set for mid-May 2027.
