Mumbai: India’s largest engineering and construction firm Larsen and Toubro Ltd (L&T) plans to start making vessels used in the offshore oil and gas exploration and production industry in an attempt to tap into growing activity in these areas in India.

The company will soon start making the so-called floating production, storage and off-loading vessels or FPSOs. An FPSO usually has facilities to process and store oil pumped up from the seabed while gas produced from the field is transported through a pipeline.

“L&T will build FPSOs at our new shipbuilding facility," said A.M. Naik, the Bombay Stock Exchange-listed firm’s chairman and managing director. L&T plans to construct India’s biggest shipbuilding yard at Kattupalli near Ennore in Tamil Nadu with an investment of about Rs3,000 crore.

Huge potential: L&T chairman and managing director A.M.Naik.

L&T Modular Fabrication Yard Llc. (L&TMFY), the Oman-based joint venture company that is 65% owned by L&T (Oman’s business group The Zubair Corp. holds the balance 35%), will also enter the business, but it will build only the top part of the FPSO that can then be fully integrated with the ship’s hull, said an executive at L&T who did not wish to be identified. The manufacture of the hull requires special expertise. L&T MFY is Oman’s first modular fabrication facility and is located at Sohar Port in North Oman; it has a 350m quay and a water depth of 12m which enables the outfitting of big FPSO vessels.

A quay, pronounced ‘key’, is a wharf or bank where ships and other vessels are loaded. A quay is constructed parallel to the bank of a waterway.

“We are talking to FPSO owners to execute contracts," said the L&T executive.

Apart from jack-up rigs, the Oman facility will also manufacture semi-submersible drilling rigs that are used in deep-water oil drilling operations. “ The modular fabrication yard will have the capacity to build four, five jack-up rigs in a year," the L&T executive said.

The Sohar yard started commercial operations in September with its first job involving an offshore structure for India’s state-owned oil exploration and production firm ONGC Ltd. It will also undertake the fabrication work of a offshore platform for an oil project in Qatar that is being executed by Danish shipping and oil conglomerate Maersk A/S.

When fully operational, the yard will have a capacity to manufacture 40,000 tonnes of modular products a year for the offshore oil and gas sector.

Worldwide, drilling contractors are investing in drill ships to meet the rising demand from oil and gas firms that are pumping money into exploration and production activities following a surge in oil prices.

“There is huge potential for the FPSO vessel construction business," the executive said.

L&T’s modular fabrication yard, the executive said, will cater to the regional and international offshore supply markets. “Fabrication contracts from the Gulf region are expected to account for roughly half of the yard’s business with international contracts making up for the rest," he added.