Tuff Offshore is in pole position to supply a prized floating production storage and offloading vessel contract from Hardy Exploration & Production India (HEPI) for its PY-3 concession field in the Cauvery basin offshore India’s eastern coast.
Three people with direct knowledge of the tender process told Upstream that Tuff Offshore is well-positioned for the FPSO contract.
“They [Tuff Offshore] are the preferred bidder for the FPSO. However, some final approvals are yet to be secured from the [PY-3] management committee ... we hear,” one person noted, speaking on condition of anonymity.
In an emailed response to Upstream's query, the Singapore company said: "Tuff can confirm that we have signed an LOI for supply of a FPSO for the PY3 Field on 24 September 2021. Tuff is not able to provide further comments/details at this stage."
A second person suggested that Tuff may have offered "FPSO Petrojarl Varg" to the operator, referring to the turret-moored unit that was previously owned by Teekay Offshore Partners, before that company was acquired by Canada's Brookfield Business Partners, then renamed Altera Infrastructure in 2020.
Tuff Offshore is said to have acquired the vessel outright, but this could not be independently confirmed by Upstream.
Altera Infrastructure had not responded for a request for clarification about the status of the vessel at the time of publication.
Invenire Energy operates the PY-3 field after its takeover of HEPI, with India’s state-controlled giant Oil & Natural Gas Corporation as a partner.
One project watcher suggested that Hindustan Oil Exploration Company, the Indian company that held a 21% stake in the PY-3 asset, is no longer associated with the development process, but a spokesperson at HOEC would not confirm this.
Invenire Energy, which operates the PY-3 block earlier had a 39% stake in the PY-3 field.
UK-based Hardy Oil & Gas subsidiary HEPI was acquired by Invenire in October 2019 for $8.75 million.
Tender delay
The tender process for the much-delayed PY-3 floater was initiated by Invenire in 2019, but was delayed on several occasions due, Upstream understands, to uncertain market conditions.
One well-placed person said the FPSO contract award will be forthcoming “imminently” and suggested that oil and gas from the PY-3 field could be put into fast-track production, more than 10 years after it was first shut in.
HEPI requires a floating production vessel capable of processing up to 20,000 barrels per day of liquids and handling 3.5 million cubic feet per day of gas.
The operator is offering a firm charter of five years, with an option to extend that period by an additional five years.
The Varg FPSO was built in 1998 and had a long history of production on the Norwegian continental shelf, but has been laid up recently. It has an oil processing capacity of 60,000 barrels per day.
The various options that were earlier offered by Invenire included either a combination of a floating production unit and floating storage and offloading unit, an FPSO or a mobile offshore production unit.
Those said to have received tender documents from Invenire in 2019 include Malaysia’s MISC and Bumi Armada; Indian players Aban Offshore, Asian Oilfield Services, Shapoorji Pallonji Oil & Gas, Greatship and Dynamic Drilling; US-based Oceaneering and Helix Energy Solutions; Norway’s Sevan Marine, Fred Olsen, Bluewater and BW Offshore.
Field development plan
The PY-3 shallow-water field was shut in 2011 as the government withheld approval to renew a contract for a leased floating production system. The joint venture had previously submitted a full-field development plan, which the partners supported, but it was not approved at that time.
Project observers said the Indian government in 2019 approved the full-field development plan for PY-3 and had also extended its production sharing contract for a decade.
PY-3 was initially capable of producing between 4000 and 4500 bpd of oil, but the new full-field development envisages output reaching 11,000 bpd by drilling additional development wells, a person close to the company had earlier told Upstream.
The PY-3 field is located off India's east coast, 80 kilometres south of Pondicherry, and lies in water depths ranging between 40 metres and 450 metres.
