Larsen & Toubro Set for $670M Project Award as India Boosts Gas Output
Existing natural gas production site off India's west coast could see long-delayed expansion, as the nation moves to cut energy imports.
PHOTO: India Oil and Natural Gas. Corp.
Looking to cut back natural gas imports, India’s Ministry of Petroleum and Natural Gas is fast tracking domestic infrastructure projects—set to award during January a $670-million expansion of its Daman production site in a shallow water field off the country's west coast. The award has been delayed for several years by low gas prices and financial pressures.
Industry sources told ENR that Mumbai-based multinational construction and industrial conglomerate Larsen & Toubro emerged in mid-December as low bidder in the procurement held by state-owned Oil and Natural Gas Corp., with a contract award expected within a month.
The firm would start new construction in the area, about 60 km offshore, in September after the monsoon season ends. The Daman site has been producing gas since 2016.
India contractor Afcons, with Indonesia’s Gunanusa Utama Fabricators, was said to be second in the bidding, with an $810-million offer, according to industry publication Upstream.
Most structural fabrication work will be done at Larsen & Toubro facilities in Gujarat state in west India and in Tamil Nadu in the south. Offshore structures include wellheads, platforms, jackets, compressor and topside modules, building modules, jack-up rigs and subsea structures.
Compared to the global average of 24%, gas comprises about 6% of India’s energy mix, with a target to increase the share to 15% by 2030.
Last year’s Daman output averaged between 4 million and 5 million cu m per day of gas, but that could double with the expansion, according to Upstream's estimate.
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India’s gas demand is being propelled by the fertilizer, power and steel sectors, say analysts. Natural gas consumption has also been on the rise supported by government policies favoring piped natural gas as fuel for cooking and compressed natural gas for urban transport. A 14% rise in the past seven years in urban gas distribution networks is cited as one reason that imports have increased, as is the impact on local supply chains from the Ukraine invasion. The nation consumed 163 million metric standard cu m per day in the past year.
Experts estimate a potential $100-billion investment is needed for India's oil and gas sector.
The state energy unit plans to tender multiple projects in coming years, to boost now declining oil and gas production from its Indian west coast fields. The company recently informed leading domestic and international contractors that it plans to procure 18 large offshore EPC contracts through 2025 for a mix of brownfield and greenfield projects, say industry sources cited by Upstream.
According to a senior ministry official, there also is a lack of accountability in the oil and natural gas unit, including in practices related to environmental protection. Major issues that need to be addressed include the release of air emissions and sea disposal of waste, says Binoy Jacob, chairman of a Delhi-based engineering consultant focused on oil and gas production.
