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ONGC to finalize Rs800 crore shipbuilding contract in a week

ONGC to finalize Rs800 crore shipbuilding contract in a week
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First Published: Thu, Jun 25 2009. 09 43 PM IST
Updated: Thu, Jun 25 2009. 09 43 PM IST
Bangalore: India’s biggest oil exploration company, the state-owned Oil and Natural Gas Corp. Ltd (ONGC), is expected to name within a week the winner of a tender to build 12 ships that will support its oil drilling operations. ONGC has budgeted about Rs800 crore for the purchase.
Pipavav Shipyard Ltd, India’s newest private sector shipbuilder, has submitted the lowest price quotation, said a person familiar with the price quotations submitted by the eight firms, whose bids have been opened. He did not want to be named ahead of a formal announcement by ONGC and also because the price quotations are confidential.
A Pipavav executive confirmed that the firm was the lowest bidder, but did not want to be named.
A spokesman for Pipavav Shipyard declined to comment. An executive at ONGC said the bids were under evaluation and a final decision would be taken shortly.
Offshore support vessels are used to ferry men, equipment and other supplies to oil fields off India’s coast and play a key supporting role in offshore oil exploration and production.
In March, ONGC had invited revised price quotes from shortlisted bidders to take advantage of declining ship costs.
In the first round of bidding, the lowest price quotation was $16.7 million (Rs81 crore) for building each vessel. Several shipbrokers Mint spoke with said the ships would now cost about $13.5 million each, as prices have declined in the wake of the global economic downturn.
Local shipbuilders such as ABG Shipyard Ltd, Bharati Shipyard Ltd and Cochin Shipyard Ltd were also in the fray for the contract.
If successful in winning the ONGC deal, this could be Pipavav’s first order for building ships used for supporting offshore oil exploration activities.
Pipavav Shipyard, an unlisted firm promoted by SKIL Infrastructure Ltd and engineering firm Punj Lloyd Ltd, first started building ships in February 2008 with orders for 26 dry bulk cargo carrying vessels from fleet owners such as Setaf-Saget of France, Avgi Maritime Services SA of Greece and Bermuda-based Golden Ocean Group Ltd. The combined value of the orders was $1.1 billion.
ONGC currently owns a fleet of 30 offshore support ships, but most of these are undergoing repairs. The oil explorer requires 62 vessels to meet its exploration and production commitments.
It has hired 32 support vessels from private shipping companies to assist in exploration.
The 12 new vessels are expected to join ONGC’s fleet within two years to both reduce the shortage and replace some of the older ships in its fleet.
p.manoj@livemint.com
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First Published: Thu, Jun 25 2009. 09 43 PM IST
More Topics: Ship | Shipping | Oil | ONGC | Punj Lyod |