On a day when the price of oil has come below the $30/bbl mark and gas prices are on the slide, ONGC has announced the award of a Rs 2450 contract for the sub-sea development work for the Vashishta and S1 deepwater gas fields situated off the East Coast of India to a combine of L&T and McDermott.
8At these prices, a deepwater gas development will most possibly provide a negative return but ONGC has gone ahead with the award because it has already contracted some parts of the work -- including the building of the Odalarevu onshore terminal -- to other contractors.
8Sources were tightlipped about the cost economics of the project but the possibility is that they are in negative territory.
8An earlier estimate by ONGC had projected a IRR of around 17.5% and an NPV of Rs 500 crore at a discount factor of 14% per annum on a gas price of..http://goo.gl/WNluOb
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8At these prices, a deepwater gas development will most possibly provide a negative return but ONGC has gone ahead with the award because it has already contracted some parts of the work -- including the building of the Odalarevu onshore terminal -- to other contractors.
8Sources were tightlipped about the cost economics of the project but the possibility is that they are in negative territory.
8An earlier estimate by ONGC had projected a IRR of around 17.5% and an NPV of Rs 500 crore at a discount factor of 14% per annum on a gas price of..http://goo.gl/WNluOb
Click on the following links for more on this story:
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