Larsen & Toubro (L&T) has won a “large” contract for the seventh development phase of Oil & Natural Gas Corporation (ONGC)’s Pipeline Replacement Project (PRP-7), offshore western India.

The Indian engineering and fabrication giant, which defines a large contract as one valued at 25 billion rupees ($333 million) to 50 billion rupees, said its wholly owned subsidiary L&T Hydrocarbon Engineering was awarded the work.

The contract involves engineering, procurement, construction, installation and commissioning of 350 kilometres of subsea pipelines and related offshore works.

The announcement confirms a recent Upstream report that tipped L&T as the frontrunner.

Although the company did not disclose the exact value of the contract, Upstream understands that it could be worth close to $500 million.

Upstream reported earlier this month that two bids were opened by state-controlled ONGC, with L&T emerging as the lower bidder, offering about $503 million.

The only other qualified bidder, Abu Dhabi-based National Petroleum Construction Company, quoted around $612 million, project observers said.

A third contender, led by Iranian Offshore Engineering & Construction, was disqualified from the tender, Upstream understands.

The PRP-7 work will be carried out across ONGC’s Mumbai High, Neelam Heera and Bassein and Satellite assets.

The tender was floated in January 2020, but the process was cancelled because of the Covid-19 pandemic and sustained low commodity prices.

The pipeline replacement projects are crucial to ONGC’s strategy to maintain the production profile of key west coast fields.

The company operates some of the nation’s largest western offshore fields, some of which are maturing and are attracting several phases of investment to rejuvenate production.

ONGC has said it plans to spend more than $4 billion in the financial year to March 2022 on lump-sum turnkey projects, services and procuring materials.

Half of that — $2.08 billion — is likely to be channelled into big lump-sum turnkey projects at onshore and offshore developments, project watchers have said.

ONGC slowed down its offshore brownfield development drive last year in the wake of the downturn triggered by the pandemic and low oil prices.

However, these projects have been gaining momentum of late after oil prices stabilised at higher levels.

PRP-7 is said to be one in a string of offshore developments that are likely to be launched by ONGC over the coming months.

The operator is also expected to set the tender ball rolling on multiple offshore EPCI projects focusing on its west coast operations, which are together expected to be worth upwards of $1.25 billion.

These include the Daman Upside Development Project, a process platform for the Ratna field, Cluster 9 development and the fifth development phase of the NBP field, project watchers said.

However, some of its upcoming projects, including Daman, still face the overhang of India’s controls on gas prices and would require more clarity from the government, one industry source said.

ONGC has carried out six expansion phases of its PRP over the past decade.

In 2017, it awarded L&T a $200 million contract for work on PRP-4 that had been left unfinished by Singapore contractor Swiber Offshore.

Malaysia’s Sapura won a subsea pipeline contract in 2018 for work on the fifth phase of PRP, also known as the subsea wells and pipeline replacement project, or SSPRP-5.

Valentine Maritime won a contract in 2019 for work on the sixth expansion phase, which was believed to be worth between $150 million and $170 million.

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