#psucontracts

Source: Indian Petroplus

After months of execution stress in Mumbai offshore pipeline projects, ONGC is once again using nomination-based contracting.

At first, it may seem counterintuitive. ONGC has faced challenges with offshore contracts awarded via nomination in the past. But this time, the approach is different — more disciplined, more controlled, and risk-focused.

Execution Stress in Mumbai Offshore

The Mumbai offshore pipeline replacement programme is a multi-year effort to replace ageing subsea pipelines carrying:

Well fluids

Gas lift

Water injection

These pipelines are critical for production continuity and safety.

Recent delays in contracts with Mazagon Dock Shipbuilders — including mobilisation issues, vessel readiness problems, and pipelaying slippages — highlighted that execution risk had become the main concern.

From Warnings to Enforcement

ONGC initially monitored progress through routine follow-ups. As delays persisted, it escalated to formal warning letters and termination notices.

This is rare for PSUs and indicates that execution deadlines were non-negotiable.

Extensions Without Compromise

Despite the tough stance, ONGC extended deadlines for two major packages:

PRPP → 31 January 2026

PRP-8A → 31 May 2026

Extensions were tactical — aimed at preventing programme stalls — without relaxing accountability.

Critical Pipelines Isolated

A fresh tender was issued for critical Mumbai offshore pipelines:

~29 km of subsea lines

Riser replacements

Live platform tie-ins

Full pre-commissioning

The tender is on a nomination basis, with only L&T invited. This is a formal tender, not an emergency workaround — a significant step in transparent, disciplined nomination.

Why This Nomination Is Different

A formal clarification cycle addressed bidder concerns about:

Liquidated damages

Currency denomination

Insurance extensions

Arbitration terms

Manpower and equipment rates

ONGC’s response was consistent: procedural corrections accepted, no compromise on accountability.

This is nomination with strict responsibility, not flexibility.

Lessons from Mazagon Dock Contracts

Earlier, ONGC spent months pushing mobilisation via reminders, warnings, and interface management.

Now, by isolating critical pipelines into a standalone LSTK package, ONGC:

Minimizes interface risk

Fixes accountability clearly

Enforces milestones contractually

Bottom Line

Only L&T is nominated — intentionally.

The bigger takeaway? ONGC is evolving offshore risk management. This is nomination with scars — and sharper teeth.

Source