ONGC Cancels Bids for Daman Gas Project

16 May 2023 CW Team

State-run Oil and Natural Gas Corporation (ONGC) has abandoned the tenders for its Daman upside gas project off the west coast of India due to bids being too high, according to insiders.

ONGC was seeking to expand its gas production from its shallow-water fields and the Daman project would have almost doubled its daily gas production to 4-5 million standard cubic metres.

Bids for the tender were reportedly much higher than ONGC's internal estimates, so the tender has been cancelled. ONGC will break up the project into separate packages and re-tender.

Larsen & Toubro emerged as the lowest bidder in December 2021 with a quote of $663.77m to build the necessary infrastructure for the project. However, sources said the quote was 36.77% higher than ONGC's revised internal estimate of $485.03m.

While L&T offered a $1m discount, ONGC found the cost too high, indicating that it was willing to tolerate a maximum variation of 20% above the internal price estimate.

The Daman project involves constructing four wellhead platforms, seven infield pipelines, a gas compressor module, and the addition of low-pressure compression to the existing process platform. It also includes topsides modifications to the existing wellhead platforms.

The Daman project has been in the works for several years but has been delayed by unfavourable gas pricing. However, the rise in domestic gas prices has made the project commercially viable.

ONGC has been producing natural gas from Daman since 2016 and has invested roughly $1bn in offshore infrastructure at the field over the last five to six years.

The Daman project was also set to increase production from the B-12 and C-24 fields, and the cancellation of the tender will lead to further delays in the output increase that the government is pressuring ONGC to deliver.

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