ONGC Close to Solution for $800m Projects Stuck Post Swiber Crash

ONGC chairman says co close to finalising the method to complete the three projects

State-run explorer Oil and Natural Gas Corporation (ONGC) is close to finalising ways to complete its $800 million projects stuck midway after the contractor, Singapore's Swiber Holdings Ltd, collapsed last year following an oil slump.

ONGC's three projects off the western coast faced delays after Swiber, the offshore construction and support services provider for oil and gas field development, filed for liquidation in Singapore following deep financial trouble.

“We are close to finalising the method to complete the projects,” said Dinesh K Sarraf, chairman at ONGC. “We would be able to bring all stakeholders together. There won't be much delay in these projects.” A final decision will be taken by mid-January, he said.

ONGC is considering using subcontractors to complete the C-26 cluster development project, which is about 90% done, sources familiar with the matter said. Terms and conditions for subcontractors will remain the same as before. Swiber was supposed to provide sub-sea pipelines and carry out platform modifications in this. ONGC has in the past used subcontractors to finish when the contractor left a project midway. Wells have already been drilled in the C-26 cluster and completion will unlock about 2.5 million metric standard cubic meters a day (mmscmd) of natural gas, helping enhance India's domestic output falling for years, sources said.

About 60% of the project at Daman is complete, where five platforms and associated pipelines were to be built by Swiber. A pipeline replacement project at Bombay High is also stuck. ONGC may issue limited tenders for the completion of these projects, sources said. All three projects were targeted to be completed at different points of time in 2017 and will now likely get delayed by at least a few months, sources said.

Swibers trouble started last July when it failed to raise fresh funds and defaulted on loans.

After this, it approached a Singapore court for winding up the company. The protracted oil downturn that resulted in fewer projects, lower margins and reduced cash flows has hurt Swiber.

ONGC had earlier attempted to invoke Swiber's performance bank guarantees but following the Singapore firm's objection and a judicial intervention, it agreed to use the money to finish the projects.

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