The major regional offshore oil and gas EPC contactor Larsen & Toubro (L&T) has awarded critical phase I installation works with an estimated value of $75 million for ONGC’s prestigious MHN project to offshore international FZC, a joint venture formed between L&T and SapuraCrest Petroleum Berhad of Malaysia. L&T holds 60 per cent equity in the joint venture and the balance held by SapuraCrest Petroleum.
The joint venture between the two companies was formed in September 2007 to build, own and operate LTS 3000, a derrick lay vessel, to undertake installation of platforms and pipelines in offshore India, the Middle East and Southeast Asia.
Addressing a press conference here on Friday, A. M. Naik, Chairman, L&T, said the construction of vessel took two years for completion. It was expected to undergo sea trials by the end of this month and would be delivered to the owners by mid-February.
Earlier, a Memorandum of Understanding was signed by L&T and SapuraCrest Petroleum for the commencement of the work in the presence of the Malaysian Prime Minister, Mohammed Najib bin Tun Abdul Razak.
Mr. Naik said work on the MHN project would commence around mid-November. It involved installation of four jackets and associated structures. The entire job, to be performed by the LTS 3000, was scheduled to be completed by end of January 2011. The vessel constructed at the Singapore ASL Shipyard was expected to reach the Malaysian waters in mid-March 2010.
As of now, the vessel was overbooked for the next five years through the ONGC and other Malaysian contacts. The total booking size of the vessels for various jobs was about $500 million. “If the joint venture business grows, both companies will not rule out the possibility of acquiring a few more vessels over a period. L&T is also looking at building its own vessel at its Chennai shipyard, which is primarily used for building defence and naval ships,” he added.
Reasoning out the necessity for the joint venture, Mr. Naik said L&T did not have the experience in maintaining marine assets. Though they were a large player in the construction and installation of platforms and laying pipelines, they did not own a vessel like LTS 3000. Through this joint venture, L&T would be able to enter the Malaysian market and also share the skillsets that SapuraCrest Petroleum had in this field.
The President and Chief Executive Officer of Sapura Group, Datuk Shahril Shamsuddin, said “both companies entered into an agreement three years ago. India is a bigger consumer of energy and hence the business of construction of pipelines will grow. We will use this opportunity to grow along with L&T.”
He said the commencement of operations of the LTS 3000 would allow the companies to better address the growing demand for oil and gas engineering, procurement, installation, construction and services. The 160-metre vessel was capable of lifting heavy loads of up to 3000 tonnes and lay pipelines up to 60” diameter. The vessel would provide offshore installation services across India, the Middle East, South East East, Australia and the Sakhalin region in Russia.
