Essar Projects has emerged the second largest engineering, procurement and construction company in India, in terms of the size of its order book at $6 billion.
An arm of the $20-billion Essar Group, it is at present executing an offshore project for ONGC for $235 million. Commodore P.C.B. Nair, Chief Executive Officer and Managing Director, Essar Offshore Sub Sea Ltd, shares with Business Line the company's future strategy and projects, both in the domestic and overseas market, with a special focus on West Asia. Excerpts of the interview:
Which are the sub-sea projects currently under implementation and where are they located?
In India, Essar is the first entity that achieved capability for laying pipelines at sea. Essar has laid hundreds of kms of pipelines for ONGC. We have also laid a 32-inch large diameter sea water pipeline from North of Penang to Langkawi Island to divert a river and provide fresh water on the island.
In India, the offshore oilfields have more than 10,000 km of pipelines in use for transporting oil, water and gas from oil wells to refining platforms. The maintenance and periodic replacement of this network is a mammoth task. Essar has laid approximately 350 km of pipelines in the Indian offshore sector over the years. Similarly, there are large dia – >36” – trunk pipelines that transport oil and gas to the onshore receiving stations. The discovery of new oil and gas fields offshore will need new pipeline to be laid as part of field development plans.
What about maintenance of such pipelines?
Generally, offshore pipeline systems have no maintenance contracts and operators have regular maintenance programmes to maintain the integrity of the pipeline systems.
What are the projects that you are working on? According to the current schedule, how much payment do you expect?
Essar Projects is at present executing anoffshore project for ONGC, the D1 Development Project for $235 million. It also recently completed and is handing over the Neelam & Heera Reconstruction Project to ONGC. This project was awarded in 2009 with a value of $216 million, with an extremely tight time schedule.
The D1 Development project's revised completion schedule as set by ONGC is March 31, 2012. As regards the current payment schedule, it is a commercial information and contractual in nature and, hence, we cannot share the details.
What is the geographical distribution of your clients as you have offices in China and Czech Republic, besides one in India?
Whilst we are executing projects in the Indian offshore sector, we are evaluating and exploring opportunities overseas with a special focus on West Asia.
What are the technical hiccups that come in your way while laying on-land networks versus sub-sea networks?
In pipeline networks, sub-sea/offshore pose risks associated with engineering challenges, weather, equipment failure, while onshore pipeline, especially in India, face commercial risks associated with right of way, and operational as well as technical risks of difficult and challenging terrain.
Since the projects require specific skilled manpower, how have you built the base? What kind of skills do you look for?
There is not only more than one technology for offshore pipe laying, but also more than one type of pipeline. Our team has technical expertise and operational capability to lay both rigid and flexible pipeline offshore in varying depths of water.
Offshore is a difficult working environment technically, operationally as well as socially, making offshore work experience and technical expertise highly desirable, especially as there is shortage of qualified and experienced offshore professionals in India and abroad. These demand-supply gaps, combined with the fact that majority of new field developments are occurring in challenging environments, are increasing pressure on wage spend across the board.