PCB Nair, Managing Director & CEO, Essar Offshore Subsea Limited, tell us about issues in offshore projects
The Seven SBU's of EPL other than EOÂSSL are all lookiÂng at the onshore part of the work, whether it is the Ports and Terminals, Oil and Gas, all of them are in the onshore business space. As you can see, Essar Project is very widespread, looking at eight businesses. So in Essar Offshore and Sub-sea (EOSSL), we are into the shallow water and the deep-water construction, both together.
Our most recent project, of much significance, is the D1 Development Project. There is a shallow water oil processing plant that ONGC operates at about 200 miles into the Sea on the West coast of India. It has an existing platform and a production arrangement with which they can produce up to 7,000 – 8,000 barrels per day of oil.
But this field is supposed to give more than 20,000 barrels once the Development work is undertaken. So ONGC decided to develop that field. Now, that field being isolated it will not be possible for them to connect the product with their existing pipelines to bring it onshore. In ONGC's Western offshore, there are hundreds of platforms and a huge network of pipeline to produce oil and to take the products onshore through huge trunk pipelines. The D1 project is likely to be completed by 31st March next year.
Logistics can be an issue in offshore projects. That is why the concept of offshore project is that you pre-fabricate everything, and install them at sea. What typically happens is you prefabricate in two stages, one – the jackets, the four or six legged, which are needed to support the top side. So you have this jacket made separately and the jacket is pile driven into the sea to 100m to 150m depth, depending upon the soil strata. Once this jacket is installed, the pre- fabricated top side is loaded out and it is brought next to it and a huge crane picks it up and installs it on the top of the jacket then, all those loose lines, pipelines, electric connections and oil connections are linked up, called Hook up. So a huge structure which weighs 10-15,000 tonne is available to you at site within three months of offshore work. Thus, the logistics problems are reduced. All the well platforms are smart platforms, unmanned and remotely operated.
In the early 1990s, Essar had set up the capability for Marine Construction and it had its own pipe-lay barge. We moved out of it because the market went south. Now that the market is booming, we want to revive this capability. Also, while others are going into the shallow waters, we wish to go into deep waters as the opportunities there are greater. The distance that Essar has to travel into deep waters construction space is far shorter than anybody else in India. And because of the cost pattern, if Essar ever goes to deep water area, it could be a profitable venture. what is needed for this is a deep water work vessel, which is infact a deep-water construction ship. We have done the concept design for such a ship in Holland already.
ONGC is producing around 31 million barrels of oil, of which 27 or 28 come from offshore. So, offshore is the main source of crude oil for us, currently.
Regarding upcoming projects, we are now bidding for two or three pipelines projects, to the value of about Rs 6,000 crores, then we are also bidding for new platform construction jobs like the D1, again pegged at about Rs 6,000 crores.
Our growth pattern looks good; we expect to pick up at least two of the tenders valued about total Rs 2,500 crores. We are set to acquire a pipe-lay Barge and are about to sign a MoU for it. This will give us the chance to grow by about 50 per cent YoY in Marine construction space. This could be much higher if we move to the business space of Deep Water Construction.