India’s state-controlled Oil & Natural Gas Corporation has delayed award of a $1.7 billion integrated integrated subsea umbilicals, flowlines and risers (SURF) and subsea production system systems (SPS) contract to a consortium of McDermott, Baker Hughes and Larsen & Toubro (L&T) for the KG-DWN-98/2 deep-water project, following a complaint by UK-based rival TechnipFMC.
Sources close to the tender process claimed that TechnipFMC, which emerged as a close second during the tender process, has complained to ONGC’s independent external monitors (IEM), contesting the lowest price bid submitted by the McDermott-Baker Hughes-L&T consortium.
“The letter of award is usually placed by ONGC within a few days of price opening. However, in this case the award has been delayed by a few weeks after TechnipFMC approached the IEM,” one source claimed.
Price offers for the prestigious integrated subsea tender were opened by ONGC on 6 August where the joint venture comprising US contractors McDermott and Baker Hughes with India’s L&T emerged as the lowest bidder, offering a price of $1.6944 billion.
TechnipFMC was only a whisker away quoting a price of $1.7096 billion, industry sources told Upstream.
The UK-based subsea giant is thought to be contending before the IEM that Samik Mukherjee, the company’s former executive vice president of corporate development, strategy, mergers and acquisitions leaked confidential bid information to rival McDermott, where earlier this year he took over as the new chief operating officer.
Industry sources suggested that that the slim price difference (less than 1%) between the two price offers has also made TechnipFMC complain to ONGC’s IEM.
One industry source suggested that while the award of the prestigious subsea contract has been delayed by ONGC, it is unlikely that the IEM would rule in TechnipFMC’s favour, since the issue of data leakage appears to be an internal issue of the UK-based contractor.
A second source claimed that the IEM has yet to take up the complaint raised by TechnipFMC and the hearing is expected to come within days.
“If the IEM decides to dismiss the complaint raised by TechnipFMC, then ONGC can go ahead and place the award,” he added.
ONGC is also believed to have extended the bid validity of the lowest priced commercial offer until 15 September, indicating that it is likely to finalise the award of the integrated subsea contract over the next two weeks.
TechnipFMC did not elaborate much on the complaint made to ONGC’s IEM, but added that the company has indeed filed a petition against its former employee.
“We usually do not comment on ongoing tenders or litigation. However, as you know, we have filed a petition against McDermott and Mr Samik Mukherjee since we are committed to competing vigorously but fairly. We take these issues very seriously and we are confident that the matter will be resolved appropriately by the courts,” a company spokesperson told the Upstream publication.
TechnipFMC earlier this month alleged in a Houston court that Mukherjee aimed to “misappropriate confidential information and trade secrets” before leaving in May for a top position at Houston-based oil and gas contracting rival McDermott.
The company has also claimed Mukherjee had downloaded confidential company documents before he moved to McDermott.
TechnipFMC added that it is seeking a judicial order to force the executive and McDermott to “disgorge” all compensation or profits received as a result of the alleged “misappropriation”.
The integrated subsea package being offered by ONGC involves a substantial workscope that is expected to include about 35 wells at KG-DWN-98/2’s Cluster 2 area and is thought to be one of the largest subsea packages being offered this year globally.
The joint workscope for Cluster 2 includes the engineering, procurement, fabrication and installation of 35 subsea trees, associated subsea control systems, infield umbilicals, infield pipelines, manifolds and pipelines from different manifolds to a floating production, storage and offloading vessel and also a fixed platform.
The SURF element will include the engineering, procurement, installation and commissioning of more than 400 kilometres of subsea flowlines across 12 segments involving gas, oil, water injection, gas lift and several other flowlines.
In addition, the SURF workscope involves installation of umbilicals totalling more than 176 kilometres, with flexible and rigid risers also included, as well as the installation of 82 pipeline end terminals, eight inline tees and 95 jumper spools. The job also involves laying several kilometres of onshore pipelines.
The SPS workscope includes the design, fabrication, supply and delivery of hardware, including all tools as well as installation equipment.
Source: Upstream
Published: 01-09-2018