ONGC's seismic vessel tender-I: Cochin Shipyard makes a bid on nomination basis

Jan 26: It has been more than two years that ONGC has been struggling to acquire a Rs 847-crore ready-built or under-construction seismic survey vessel of 6/8/10/12 streamers. Finally, for the company, there seems to be a solution in sight. Cochin Shipyard Ltd (CSL), a public sector company, has asked the E&P major for the contract to build such a vessel on a nomination basis though it remains a moot point whether the shipyard will have the expertise to build such a sophisticated piece of equipment.
 8The CSL offer came just when the tender evaluation committee has finished hammering out a fresh bid evaluation criteria (BEC) for the re-invitation of the seismic vessel tender -- originally floated in October 2010 -- and the proposal was to go to ONGC's apex Executive Procurement Committee (EPC).
 8The public sector shipbuilding company is also lobbying with the petroleum ministry for award of the contract on a nomination basis.
 8The petroleum ministry, in turn, has sought ONGC's comments on the matter.
 8Surprisingly, ONGC has not reacted adversely to the proposal. The company has informed the ministry that it was not averse to such an option. It further informed that it has prepared an agenda on the said proposal, taking into consideration the views expressed by its Western Offshore Basin (WOB) that the company should go ahead with the CSL's proposal.
 8The agenda has been sent to the company's Executive Committee (EC) for approval.
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ONGC's seismic vessel tender-II: Will Cochin Shipyard be able to deliver on time?

Jan 26: Even as the EPC deliberates on an offer by Cochin Shipyard, the tender evaluation committee has completed the requisite changes in the ONGC's tender for acquisition of a ready-built or under-construction seismic survey vessel of 6/8/10/12 streamers in case a tender is still floated for the vessel.
 8Though the initial tender was floated for a vessel having either 6, 8, 10 or 12 streamers, it has now been decided to go for a dual-source 12-streamer vessel, with an onboard processing system.
 8The company had decided to cancel the earlier tender as one of the two shortlisted bidders had offered an 8-streamer vessel, while the second shortlisted bidder had offered a 12-streamer vessel. The fact that it became difficult to compare the two bids was one of the reasons why the tender was rejected. But the decision to cancel the tender was criticized by some industry watchers as unwarranted.
 8Furthermore, the E&P major also wanted that the re-invited tender to have a provision for geo-physical operations for a larger period than mentioned in the earlier tender. In the earlier tender, the contractor was required to manage geophysical operations for the first three years only. However, later, it was argued that it would be better to have a provision for geo-physical operations for a period longer than three years.
 8The exact details of the BEC for the upcoming tender are not clear yet, but it is certain that there would be many changes compared to the technical specifications sought in the original tender.
 8The delivery date of the vessel as per the original tender, that is, April 30, 2012, has already gone for a toss. It would be interesting to see within what timelines Cochin Shipyard Ltd (CSL), if at all the deal works out, promises to deliver the vessel to ONGC.
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ONGC's seismic vessel tender-III: A backgrounder

Jan 26: If ONGC had not made a mountain of a molehill, the seismic survey vessel, by now, would be getting ready to be handed over to the company. The delivery date of the vessel as per the original tender was April 30, 2012.
 8Readers will recall that the E&P major decided to re-invite the tender -- floated in October 2010 for the first time -- after deviations -- and some think that these were minor deviations --  were found to be taken by the two prospective bidders in the fray. The two bidders were Drydock World of Dubai and the consortium of Bharati Shipyard and Great Offshore.
 8Both the bidders had taken deviations relating to the spare part prices quoted in the tender. The bidders had apparently not submitted an exhaustive list of spares and consumables, along with item-wise price, as required under the price format. As this was a deviation from tender provisions, the E&P major opined that both the bids were liable for rejection.
 8But main reason behind the rejection was the fact that ONGC was not happy with the basic BEC of the tender and wanted to find a reason to cancel the tender on grounds of deviations taken by the two bidders.
 8Miffed with this decision, one of the bidder, Great Offshore Ltd, sought the petroleum ministry's intervention in coaxing ONGC to relax the tender provisions instead of re-inviting a tender as these deviations were supposedly minor in nature. It also made a representation to the Independent External Monitors (IEMs) on the matter.
 8The IEMs, after going through the case, opined that given the nature of deviations and amounts involved, there was no reason to consider the deviations as substantive or major requiring re-tendering. They, however, stopped short of giving any clear instructions to ONGC and opined that it was the company's prerogative to take a final view on this. The company of course cancelled the tender.
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TAPI gas pipeline project: India and Pakistan agree on transit fee formula

Jan 26: Finally, there has been some headway on the issue of transit fee that India will have to pay to Pakistan for allowing the Turkmenistan, Afganistan, Pakistan, India (TAPI)  gas to flow across the border. Pakistan has "in-principle" agreed that whatever transit pricing formula is eventually settled between India and Afghanistan would also be acceptable to it.
8The assurance from Pakistan came during a meeting held between Indian petroleum minister S. Jaipal Reddy and his Pakistani counterpart Dr. Asim Hussain today (January 25, 2012) at Delhi.
8This was Dr. Hussain’s second visit to India as minister, the first having been on April 28, 2011, when the Petroleum Ministers of Turkmenistan, Pakistan, Afghanistan and India had met in New Delhi to attend the 13th Steering Committee Meeting for the TAPI Gas Pipeline Project. Though this was the third meeting with Pakistan on the issue of Transit Fee, it was the first one at the political level.
8India and Pakistan agreed that further negotiations would be conducted in a transparent manner keeping in mind the overall economics of the project.
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Surge in demand for LPG equipment: IOC to place procurement order worth Rs 1,973 crore for its requirement in 2012-13

Jan 26: The proposed freeing up of new LPG connections countrywide is making oil marketers gear up for the surge in demand volume.
8IOC has decided to procure LPG equipment for meeting its requirement for 2012-13, at an estimated cost of Rs 1,972.67 crore. The equipment are required for meeting the enrolment and double bottle connection requirement for 2012-13. The equipment requirement is based on industry-wide projections for release of new connections. The financial estimates have been prepared based on the existing contract rates as on October 2011 with 10% contingencies for increase in price of steel and labour charges. The following requirement has been spelt out by IOC for 2012-13:
814.2 kg cylinders: 131.23 lakh
819 kg cylinders: 3.63 lakh
847.5 kg cylinders: 0.36 lakh
8Domestic pressure regulators: 87.76 lakh
8LOT valves: 0.21 lakh
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Contractual snags at Paradip Refinery: IOC-Foster & Wheeler relationship beyond repair?

Jan 26: As in love, so too in business can relationships break down precipitously. In 2009, IOC awarded a Rs 2101.75 crore consultancy contract to the UK-based Foster Wheeler Energy Limited (FWEL) for its Paradip refinery project, raising eyebrows about it's willingness to pay an almost 75 per cent premium over its own estimate of Rs 1350 crore for the job. IOC awarded the contract to the exclusion of public sector Engineers India Ltd (EIL), which was not allowed to participate in the tender. Now, less than three years later IOC, unimpressed with FWEL's performance has threatened that it may not work with the global consultant ever again.
8Taking serious note of the lapses on part of FWEL, while executing its order for the Rs 30,400 crore Paradip Refinery -- which has seen the project's commissioning schedule being deferred by 10 months--from November 2012 to September 2013 -- IOC is now contemplating not awarding any contracts to the UK-based consultant in the future.
8IOC claims to have had a bitter experience while working with FWEL. In November 2011, IOC dialled the company's UK-based chairman to let its displeasure known over the slow pace of work. The refinery major conducted "intensive" discussion with the chairman of FWEL and stressed on the need to monitor the company's progress for timely implementation of the refinery project.
8Both IOC and FWEL had decided to form inter-disciplinary teams to develop a system-wise completion plan but the attempt seems to have run aground.
8IOC is also looking at the possibility of levying penalties on contractors as a general principle in case of delay in completing work orders.
8In March 2009, the international engineering major was awarded the Project Management Consultant contract for the mammoth "package-1" of the refinery project, at a whopping cost of Rs 2101.75 crore. "Package-1" comprised of the Atmospheric and Vacuum distillation Unit (AVU), the Naphtha Hydro-Treater (NHT)-Continuous Catalytic Regeneration (CCR), the Reformer, Sour Water Stripper (SWS) and Amine Regeneration Unit (ARU), the Sulphur Recovery Unit (SRU), the Spent Sulphuric Acid Regeneration Unit (SARU) and Kerosene Treating Unit (KTU), offsites and utilities, and control room, cooling tower, AVU fired heaters, DM plant and flare package.
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Mahanadi water for Paradip Refinery: Orissa forest department arm twists IOC to cough out 10 times compensation

Jan 26: IOC has been arm twisted by the Orissa forest department to bear 10 times the cost of statutory compensatory plantation for laying a raw water pipeline from the Mahanadi river to the Paradip Refinery.
8It may be noted that IOC is in the process of laying a raw water pipeline to source water from the Mahandi River to the Paradip Refinery. However, a major part of the pipeline is to be laid in the Right of Way (ROW) of State Highway-12, for which permission was accorded by the Public Works department subject to grant of an NOC by the Orissa Forest Development Corporation (OFDC).
8However, OFDC played truant and demanded a compensation to the tune of Rs 18.62 crore towards plantation of 10 times more plants than those that would be damaged while laying the pipeline.
8The basis of calculation as well as the compensation amount sought by the OFDC was challenged by IOC but to no avail. Under protest, the corporation paid a first installment of Rs 9.01 crore in April, 2011. The balance payment was to be made in four annual installments.
8Subsequently, in April, 2011, OFDC issued the NOC and pipeline laying work was completed for a distance of 9.1 km.
8However, in August, 2011, OFDC asked IOC to pay the entire balance amount of Rs 9.61 crore on an immediate basis. As IOC sought a legal opinion, OFDC withdrew the NOC in October, 2011 which resulted in a stoppage of pipeline laying work.
8Given the importance of the pipeline for the refinery, IOC has now decided to pay the balance amount of Rs 9.61 crore to OFDC to obtain NOC so that pipeline laying can resume at the earliest.
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IOC's new credit policy for petrochemicals: Board provides approval but with additional safeguards

Jan 26: IOC has put in place a new credit policy for petrochemicals keep competitors from nibbling at its market share in this highly competitive segment.
8As per the new policy which was recently approved by the IOC board, the corporation will offer credit to the level of 1.5 times of the security provided by channel partners in the form of a Bank Guarantee or cash.
8In addition, IOC has also expanded the credit cap to Rs 610 crore for the petrochemical business which is to be reviewed every six months.
8However, while approving the policy, the board, on the suggestion of one of the independent director, Anees Noorani, has asked the company to obtain additional safeguards while extending credit. Two such safeguards suggested by Noorani included obtaining post-dated cheques and factoring of credit through banks.
8Presently, most of IOC's credit business is against a 100% security, except for supply of Linear Alkyl Benzene (LAB).
8The corporation's entire polymer business is done through channel partners appointed as per an approved policy that is 100% secured.
8The need for a robust credit policy was felt as other suppliers in the industry were known to be offering credit beyond the security deposit to their partners.
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Complying with green norms: IOC to set up a Reverse Osmosis unit at Gujarat Refinery for Rs 160 crore

Jan 26: The IOC board has approved  the proposal for setting up a Reverse Osmosis (RO) unit at the Gujarat Refinery at a cost of Rs 160 crore.
8Present environmental guidelines require IOC to meet additional water requirement of the Gujarat Refinery through recycling of treated effluent discharged from the Residue Upgradation Project.
8The refinery is presently recycling 97% of the treated effluent, which is subsequentlysent to the cooling tower and fire water system.
8However, the Total Dissolved Salt (TDS) level of the treated effluent is higher than that of fresh water, which has resulted in in lower concentration at the cooling towers.
8The Gujarat Pollution Control Board has also instructed IOC to stop the current practice of discharging high TDS water in open channels.
8The RO unit will process high TDS treated effluent. This will also result in availability of fresh water for the cooling towers.
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Significant developments at IOC during December 2011-I: Under recoveries hurt the company

Jan 26: The following are some of the important developments which took place in IOC during the month of December 2011:
8The gross under-recovery of the public sector oil marketing company trio of IOC, BPCL and HPCL on the three sensitive products during the October-December 2011 period is likely to be Rs 17,934 crore. After considering one-third discount from upstream companies, the unmet under-recovery is slated to be Rs 11,956 crore. The total unmet under-recovery upto December, 2011 is estimated at Rs 19,229 crore including Rs 7,273 crore of unmet under-recovery upto September 2011.
8IOC`s borrowings are estimated to be around Rs 83,300 crore as of end of December 2012, considering an exchange rate of Rs 53.63 per US dollar.
8A delay in receipt of cash compensation is beginning to impact IOC`s market image. Rating agencies like Moody`s and S&P have expressed their concern on the blockage of funds due to delay in receipt of cash compensation. The depreciating rupee too is adding to the under-recoveries.
8IOC has raised a long term pre-funded loan syndication of $250 million for financing its Rs 30,400 crore Paradip Refinery project.
8The total ATF outstanding of Air India stood at Rs 2,500 crore as on December 12, 2011, excluding an interest of Rs 423 crore but it seems to be difficult to coax the airline major to reconcile the figures. After consistent follow ups by IOC, Air India has finally confirmed an outstanding amount of Rs 1,406 crore, excluding interest, as on March 31, 2011 subject to reconciliation. The interest component of Rs 318 crore is subject to negotiation. Meanwhile, the government has advised IOC to continue extending three months revolving credit to Air India with a rider that in case of default in payment the airline should be put under the `cash & carry` scheme.
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Significant developments at IOC during December 2011-II: Gross Refining Margin looking up

Jan 26: The following are some other details on the important developments that took place in IOC during December 2011:
8IOC clocked a Gross Refining Margin (GRM) of $4.02 per barrel in November 2011, as against $2.93 per barrel registered during the month of October 2011.
8The long-pending issue of supply of enhanced quantity of natural gas to Panipat refinery through the existing metering system of the Dadri-Panipat gas pipeline has been resolved. Accordingly, the supply of natural gas to refinery has increased from a level of 1.65 MMSCMD to 1.9 MMSCMD with effect from December 1, 2011.
8IOC`s Digboi Refinery has been selected for the `First Prize` and Gujarat refinery for the `Certificate of Merit` in the refinery sector for the National Energy Conservation Awards, 2011, instituted by the power ministry.
8A Gigantic Vacuum Distillation Unit (VDU) column (57 metre long, 14.2 metre wide and weighing about 1,000 tonnes) was safely erected on November 27, 2011 at the site of Paradip Refinery. Other major equipments installed during December 2011 include the massive Primary Absorber column of the Indmax unit (346.6 MT), De-propaniser column (414 MT) of the Propylene Recovery Unit and the top section (525 MT) of the main Fractionator column of the Indmax unit.
8A  75 KWp Rooftop Off-grid Photovoltaic Project was commissioned in November 2011 at the head office of IOC`s pipelines division in Noida to harness renewable energy. The system provides a minimum guaranteed annual generation of 96,000 units.
8The Sustainability Report of IOC for 2010-11 is ready for release. The report has been prepared as per GRI-G3 guidelines.
8IOC`s Succession Management Programme is currently underway and assessments for executive directors, general managers and deputy general managers have been completed. A similar exercise for the officers in grades `C` to`F` is in progress.
8A fatal accident occurred on December 9, 2011 at the Koyali Bitumen Marketing Terminal. During a trial truck loading of bitumen being carried out for testing of loading facility, the hose got separated from the flange at the hose clip point, resulting in the bitumen gushing out with pressure. It fell on driver of the truck, who was rushed to the refinery hospital, where he was declared dead.
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Levying of LD, Part-I: How are penalties calculated for extension cases in NELP and CBM blocks?

Jan 26: As per the PSC, a contractor has to pay liquidated damages (LD) to the government in case it seeks extension in exploration blocks or surrenders blocks where no hydrocarbon discoveries are made.
 8Extensions are normally sought to complete the Minimum Work Program (MWP) in blocks awarded under NELP and CBM rounds.
 8The LD calculated, in such cases, is equivalent to the amount required to complete the balance MWP. In case, there are more than one contractors, the share of each contractor is equivalent to their Participating Interest (PI) in the block.
 8The penalty for seeking extensions is levied in line with the New Extension Policy -- introduced in April 2006 -- for considering extension proposals for NELP and Pre-NELP blocks.
 8As per the extension policy, when the Minimum Work Program (MWP) of the relevant phase is not completed within the stipulated period of that phase and no hydrocarbon discovery are made, extension is granted as under:
 --Upto six months: No penalties
 --Additional six months (upto 12 months): 100% Bank Guarantee (BG) + 10% LD
 --Beyond 12 months (upto 18 months): 100% BG + 30% LD
 8A similar extension policy -- dubbed CBM Extension Policy -- was introduced by the government in April 2006, for considering extension proposals for CBM blocks. Under this policy, if the MWP of the relevant phase is not completed within the stipulated period of that phase and extension is sought in Phase-I and II to complete the MWP (excluding excusable delays), penalties are levied as under:
 --Upto six months: Extensions are granted by the Steering Committee in terms of the respective contract.
 --Additional six months (upto 12 months): 50% BG
 --Beyond 12 months (upto 18 months): 75% BG + 15% LD
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Levying of LD, Part--II: ONGC chairman can levy penalty upto Rs 100 crore for each case

Jan 26: In extension cases for NELP and Pre-NELP blocks, the determination of cost of un-finished minimum work programme (MWP) is a tough job.
 8To streamline this, the petroleum ministry, in June 2007, came out with a policy -- dubbed Policy-III -- for determination of the cost of the un-finished MWP.
 8As per Policy-III, the competent authority to approve the final amount towards the cost of unfinished minimum work programme is the government.
 8Pertinently, LD for extension cases and the cost of the unfinished work programme on surrender of blocks is paid on two occasions: initially on a provisional basis based on the estimates and later on an actual basis, that is, the difference of actual amount calculated over the provisional amount already paid.
 8Under the Book of Delegated Powers (BDP) 2009, ONGC chairman (CMD) has the power to order the payment of penalty, upto a maximum of Rs 100 crore, for each case, for extension as well as relinquishment cases.
 8After the CMD sanctions the penalty, it has to be endorsed by the concerned director as well as the finance director of the company.
 8Then again, the report on the mechanism of appriving such a penalty has to be submitted to the board in next board meeting along with justifications for surrender or extension, as the case may be, for a final approval.
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Levying of LD, Part-III: ONGC paid Rs 80.24 crore as penalty in 2011

Jan 26: In 2011, ONGC paid a total of $17.04 million (Rs 80.24 crore) as penalty (LD) for non-completion of the MWP in seven blocks, namely CB-ONN-2001/1, CB-OSN-2003/1, KK-DWN-2001/3, MN-DWN-2002/1, MN-DWN-2002/2, NEC-DWN-2002/2 and KG-DWN-2002/1.
 The block-wise breakup of LD paid, along with the reasons, is as under:
 8CB-ONN-2001/1: $20,706.78 (Rs 9.4 lakh)
 --The total LD worked out to $54,551 towards the cost of unfinished work programme on an actual cost basis for seeking second six-month extension in the block. As $33,844.22 was already paid as provisional LD on August 26, 2008, the balance payment of $20,706.78 was made on May 16, 2011. The extension was sought to regularise the drilling of the fourth and the last well of Phase-I and to exercise the option to enter into Phase-ll as per PSC provisions.
 8CB-OSN-2003/1: $30,01,639  (Rs 14.38 crore)
 --A total of $30,01,639 was paid by ONGC in three installments as LD to complete the remaining MWP of Phase-I, that is, drilling of two wells and to enter into Phase-ll.
 8KK-DWN-2001/3: $9, 89,995 (Rs 4.38 crore)
 --The total LD worked out to $16,10,022.3 as the cost of the unfinished work programme on an actual cost basis. As $6,20,027.3 was already paid as provisional LD on March 19, 2008, the balance payment of $9, 89,995 was made on May 10, 2011 to complete the remaining MWP of Phase-I, that is, drilling of one well KK-DWN-1, which turned out to be dry.
 8MN-DWN-2002/1: $12,96,990 (Rs 6.10 crore)
 --ONGC made a payment of $12,96,990 on August 14, 2011, as provisional 10% LD to pursue unfinished MWP of Phase-I, that is, completion of drilling of well MDW#12 (2nd) and drilling of remaining 1 well (3rd).  The well MDW#12 was completed on November 15, 2011, which turned out to be dry. The drilling of remaining one well needs to be completed by March 16, 2012, that is, the second six-month extension validity.
 8MN-DWN-2002/2: $54,80,661 (Rs 25.81 crore)
 --ONGC made a payment of 10% provisional LD amounting to $54,80,661 on September 14, 2011 to pursue the unfinished MWP of Phase-I, that is, drilling of two wells. The drilling of wells have to be completed by March 16, 2012, that is, the second six-month extension validity.
 8NEC-DWN-2002/2: $26,93,906 (Rs 12.68 crore)
 --The company has paid 10% provisional LD amounting to $26,93,906 on September 14, 2011 to pursue the unfinished MWP of Phase-I, that is, drilling of two wells. One well (MDW#13) was completed on November 8, 2011, and presence of gas has been recorded in the MDT sample pertaining to the Mid Miocene. The drilling of remaining one well needs to be completed by March 16, 2012, that is, the second six-month extension validity.
8KG-DWN-2002/1: $35,64,142 (Rs 16.78 crore)
 --ONGC has paid 10% provisional LD amounting to $35,64,142 on September 13, 2011 to pursue the unfinished MWP of Phase-I, that is, drilling of two wells. One well NAD 5B-1 has been taken up for drilling. The drilling of remaining one well needs to be completed by March 16, 2012, that is, the second six-month extension validity.
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Levying of LD, Part-IV: Details of penalties paid by ONGC for non-completion of MWP in CBM blocks

Jan 26: ONGC also paid a total of Rs 5.56 crore as penalties for the unfinished minimum work programme at two of its CBM blocks, SK-CBM-2003/II and NK(W)-CBM-2003/ll in 2011.
 The details are as under:
 8SK-CBM-2003/II
 --The CBM block, measuring an area of 70 sq. km., was awarded to ONGC with 100% PI under the CBM-II round.
 --The effective date of the CBM contract was May 12, 2006.
 --Under the MWP of phase-l (2 years), the contractor had committed to complete 10 core holes and test three exploratory wells.
 --ONGC sought an excusable delay of 502 days on account of delay in getting the requisite forest clearance.
 --In order to complete the MWP, ONGC had to take three extensions of six months each.
 --The company paid a provisional LD of 15% of the unfinished MWP amounting to Rs 12.49 lakh on July 27, 2011, for taking the third six-month extension.
 --MWP of phase-l was completed on February 15, 2010.
 --The analysis of core holes and drilled exploratory wells indicated poor CBM prospects.
 --Subsequently, ONGC opted not to enter into Phase-ll and relinquished the block on March 25, 2011.
 8NK(W)-CBM-2003/ll
 --The CBM block NK(W)-CBM-2003/ll, measuring an area of 267 sq. km, was awarded to ONGC with 100% PI under the CBM-II round.
 --The effective date of the CBM contract was May 12, 2006.
 --The MWP of phase-l (2 years) included completion of eight core holes and two exploratory wells.
 --On expiry of Phase-I, the first extension of six months was obtained as per the CBM Extension Policy.
 Thus, phase-l -- including the six-month extension -- ended on November 11, 2008.
 --The analysis of eight core holes drilled during Phase-I indicated poor CBM potential in the block and it did not warrant drilling of committed two exploratory wells as part of the MWP.
 --Accordingly, ONGC made a provisional payment of  Rs 5.44 crore ($1.22 million) towards the cost of the unfinished work programme of drilling of two exploratory wells in Phase-I.
 --The payment was made on July 20, 2011.
 --Because of poor CBM prospectivity, ONGC choose to exit from the block without drilling the two exploratory wells.
 --The company relinquished the block with effect from November 12, 2008.
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Dry-docking of Sagar Vijay-I: HSL gets the job on nomination basis

Jan 26: ONGC has awarded a contract for dry-docking and repair of its mobile offshore drilling unit (MODU), Sagar Vijay, to Hindustan Shipyard Limited (HSL) on a nomination basis for a period of 90 days. The estimated value of the contract works out to Rs 21.14 crore. 
8The Drillship Sagar Vijay was built by Japan-based Hitachi Zosen and commissioned in 1985. The rig has undergone nine dry-dock repair jobs so far including a major upgradation in 1997-98. The last dry-docking of the rig was carried out by HSL in 2009.
8ONGC invited a tender--under a two bid system--for dry docking Sagar Vijay from HSL on nomination basis. 
8On opening of the bid, it was found that HSL had taken some deviations from the tender conditions and had also quoted costs which were considered to be on higher side for some of the items. Thus, confirmations and additional documents were sought from the bidder. Subsequent price negotiations reduced the quote from Rs 25 crore to Rs 21.14 crore. 
8The E&P major observed that the certificate of Sagar Vijay had already expired on December 31, 2011 and a series of new inspections and repairs were required under statutory norms. Since HSL has already kept a berth ready for the dry-docking from January 16, 2012, the E&P major decided to award the job to HSL without any further delay.
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Dry-docking of rig MODU Sagar Vijay-II: Contract cost reduced by 15% after two rounds of price negotiations

Jan 26: HSL has offered a total reduction of Rs 3.88 crore, which amounts to 15.52% of the initial cost quoted by them, after two rounds of price negotiations with ONGC.
 8The cost of surveyors was reduced by a whopping 85.82% from initial Rs 87.48 lakh to Rs 12.40 lakh. This is because HSL agreed to charge surveyor`s fee at actual plus 7.5% service charge instead of quoting a standard price for surveys to be carrued out over 45 occasions.
 8The new cost of surface preparation and painting is also 22.07% lower than their original quote of Rs 9.17 crore and is mainly due to change in quantity.
 8The dry docking survey cost too has been reduced by 52% in the revised price bid as the cost of the sea chest and butterfly valves is taken to be nil since, during dry docking repair, only overhauling of the valves is required. In case the valves are required to be replaced, the same will be procured from the market by shipyard with cost plus 7.5% service charge.
 8The other component which has contributed to the change in the total contract cost is sewage collection cost which has also been made nil as HSL agreed to offer the facilities free of cost.
 8Apart from the above, HSL has reduced the cost of bilges and tank tops, stagings and scafoldings, non destructive testing, renewal of steel, anchor ranking frames and wires cost by 7.5%.
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Dry-docking of rig MODU Sagar Vijay-III: Costing details

Jan 26: The website carries here for reference purposes the final prices quoted by HSL for dry-docking of rig Sagar Vijay. The following information for 233 items categorised into 42 packages is given:
 8Quantity
 8Unit rate
 8Discount offered on unit rate
 8Service tax
 8Custom duty
 8Sales tax
 8Total negotiated price
 (Click on Reports for more information)

Bulk LPG transportation tender: More tankers qualify than required; tender to be finalised by February

Jan 26: There is a lot of excitement in the road tanker business these days over the transportation tender floated by the oil marketing companies (OMCs).
 8The last tender expired on October 31, 2011 but has been extended by three more months pending finalization of the current tender.
 8The Notice Inviting Tender (NIT) had sought a total of 11,492 tankers.
 8In response to the NIT, 12,622 tankers were offered
 8The tanker owners are unionized and carry a lot of clout.
 8There was a lot of behind the scene arm twisting going on even as negotiations were on.
 8The website carries here full zone-wise details of the current tender in terms of the number of tankers sought under the NIT, those who quoted, those who qualified.
 8Even though the number of qualified tankers is more than what is required, the demand now is that all qualified tankers be taken in.
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News Briefs

Jan 26: 8Declaration of Q3 results: The following companies will declare their audited financial results for the quarter ended December 31, 2011, as under:
--Petronet LNG Ltd: January 27, 2012
--ONGC: February 2, 2012
--HPCL: February 3, 2012
--BPCL: February 10, 2012
8WPI for 'fuel and power' for the week ended January 7, 2012: The wholesale price index (WPI) for the major group 'fuel and power' -- for the week ended January 7, 2012 -- remained unchanged at its previous week's level of 172.7 (provisional).
 --The annual rate of inflation, calculated on a point-to-point basis for this major group also remained unchanged at its previous week's level 14.45 percent (provisional) for the week ended January 7, 2012.
 --The items for which the index showed variations are light diesel (+3%), bitumen (+2%) and aviation turbine fuel (-1%).
 --The index for 'minerals' group, however, rose by 0.4 percent to 322.8 (provisional) from 321.4 (provisional) for the previous week due to higher prices of crude petroleum (1%).
 --The website also carries the details of the inflation build-up over the week, financial year-end and over the year for some important items like petrol, diesel and LPG. The trend in rate of inflation over the last six weeks is also given for these items.
8HOEC appoints V. Srinivasa Rangan as Additional Director: Hindustan Oil Exploration Company Ltd (HOEC) has informed the BSE that the Board of Directors of the company have appointed V. Srinivasa Rangan as an Additional Director on the Board of the company with effect from January 23, 2012.
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