Excellence in Project Execution

Bhaskar Patel,
Managing Director, Technip India Ltd.
Technip in India, like elsewhere in the world, is keen to support the E & P players and the local hydrocarbon supply chain industry with their excellence in Project execution in all three business segments i.e. Onshore, Offshore and Deepwater subsea, says Bhaskar Patel, Managing Director, Technip India Ltd. In a candid interaction with Mittravinda Ranjan and Rakes Roy, he speaks about the company's ongoing EPC activities in India and abroad in detail. Excerpts…

Today's oil & gas exploration has gone deeper to deeper from past shallow reservoirs to even greater, how have the technology, detailed engineering and providing solutions of EPC changed to develop deep and ultra deep fields. How has Technip evolved its expertise in this regard? Please Elaborate Technip's EPC activities - both onshore and offshore - in India.
Since the shallow water hydrocarbon reservoirs are getting depleted, the focus is shifting onto the Deepwater developments. As far as Technip is concerned, worldwide we have been the leader in shallow to Deep to ultra-deepwater subsea development projects. Doing engineering for such projects has been our strength, which is further augmented by our innovatively developed product line such as Flexibles & Umbilicals and installation assets, capable of installation upto 3000 m of water depth. There is also a huge focus on R & D work related to subsea.

Since seventies, as the world moved to deep water and then to ultra deep water, Technip has kept itself abreast with its pioneering Engineering capabilities, R & D work on Design & product line and upgrading the installation fleet to overcome challenges in Deep to ultra Deepwater developments. Importantly also to note, Technip has done strategic alliances like with FMC Technologies to offer a complete optimised solution from surface development to commissioning.

With regards to Offshore EPC project activities in India, Technip has already executed and successfully handed over HRD Process platform project to ONGC. This project was executed in Consortium with Afcons - India and THHE - Malaysia in year 2015. This was a project where Technip's proprietary Unideck Floatover Technology was used for the first time in India for Floatover installation of a Deck. This is the first project ever in India, where the Floatover deck design was done by an Indian company.

Onshore Activities:
Key ongoing projects in domestic market:
  • Building a 6 MMSCMD onshore terminal at Odalarevu, Andhra Pradesh, India for ONGC as part of their Integrated Development of Vashishta (VA) & S1 Fields. VA & S1 fields are located at 30-35 km off the Amalapuram coast in KG Basin, East Coast of India at water depths of 250-700 m. The Onshore Terminal worth of 100 MN Euros awarded to Technip is one of the critical components of Integrated Development of VA & S1 Fields. Initially there was delay to commence the project due to certain local issues but now site work is going on full swing.

  • Prestigious project awarded by Air Products to provide project management, as well as engineering, procurement and construction management (EPCm) services for a new industrial gas complex for the Bharat Petroleum Refinery Limited (BPCL) located in Kochi. Being built on a "build, own and operate" basis (BOO), the industrial gas complex is designed to supply industrial gases (hydrogen, nitrogen and oxygen) to BPCL's Kochi refinery as part of its Integrated Refinery Expansion Project (IREP). This project will increase BPCL's crude refining capacity to 15.5 million metric tons per annum (approximately 310,000 barrels per day) and produce clean transportation fuels to meet Euro IV /V specifications.
  • CDU/VDU Heaters for BPCL Kochi Refinery
  • Largest Ethylene Cracker Plant for Reliance in Jamnagar
  • argest PTA Plant with BP Technology for JBF Mangalore
  • Plant capacity enhancement and FEED flexibility project through the revamp of RIL Ethylene plants at Dahej, Nagothane and Hazira
  • Lumpsum EPCM contract including high end process studies/Basic Engineering for CDU/VDU, ARU, FG Treating unit, Utilities & Offsite for leading client HMEL
India team as Partner in Execution of Group Mega Projects:
  • Mumbai Centre in collaboration with Technip North America delivering engineering services for USGC Petrochemicals Project for Chevron Philips Chemical Company (CP Chem) which aims to build World’s largest PE capacity at single location
  • Almost 400 engineers in Chennai Operating Centre are working closely with other entities of the Group to carry out the engineering, procurement, supply, construction and commissioning of an integrated facility for natural gas liquefaction in arctic environment for Yamal LNG project in Russia. Technip, leader of a consortium with JGC, was awarded this project by JSC Yamal LNG, owned by NOVATEK (80%) and TOTAL (20%)
With the current low crude price where Global E & P majors are switching to Onshore from Offshore development, how does EPC company like Technip align its strategies in this turmoil time?
Our strengths lie in our technology and vessels pertaining to Offshore, Subsea, Deepwater which differentiate us in the offshore market. Prima facie, the current oil price USD 40-50/barrel seems not economical viable in developing offshore & deepwater fields. We firmly believe that the supply-demand curve will escalate and the price will reach about USD 60-70 per barrel which will be a good price for sustainable deepwater development. Traditional rich hydrocarbon geographies like Mexico, East and West Africa have been started a lot of deepwater discoveries which will further accelerate the growth of deepwater filed developments.

The recent discussion of FMC Technologies merger with Technip is a part of our continuing philosophy of building our strengths in deepwater where FMC will be complement to our Offshore and Subsea market.

Can you please detail about the qualification criteria and contracting strategies in bagging EPC contracts in Indian oil & gas industry vis-a-vis globally? What are the project management challenges of EPC in achieving objectives of timely completion, avoiding costs overturn and maintaining quality of oil & gas project? As a services provider how does your organisation respond to these challenges?
India is highly price sensitive market. So players in the industry tend to offer 'fit for purpose' to win the project. The recognized model of project execution in India is the Lumpsum EPC model. In some cases, depending upon own resources, some clients prefer a EPCM services model, where the contractor has to provide all services for Engineering, Procurement and Construction management, but the actual purchase of equipment and doing the civil construction and erection of the plant are done under the direct responsibility of the client through orders placed with concerned vendors /contractors.

Whereas, globally the most popular model is to adopt a FEED converted LSTK-EPC model wherein the client selects a contractor based on a FEED bid along with stipulated conversion norms to an LSTK-EPC. After the FEED, it is normal for a contractor to give highly accurate cost estimate of the project .

Turnaround time to award the project most likely to get stretched due to several objections raised by the participants in the bidding process which badly hit the contractor's cost projection and Client's execution priorities .

We think following measures will definitely boost the competitiveness and ensure quality projects in energy sector in India:
  1. LSTK–EPC Model:It minimises the definition uncertainties, improves the accuracy of the estimate for equipment and bulks and provides the right basis for construction costs. Also, it reduces the project execution time. This integrated client-contractor approach is applied by most of the large IOCs (International Oil Companies) for their projects. This mode of execution is yet to become popular in India.
  2. Bidding process in India is quite simple - lowest bid win the award. There should be a balanced weightage distribution to technology/quality vs price: Best price vs Best operating plan.
  3. Competent civil and erection contractors to deliver high safety & quality standard and infrastructure should be improved
  4. May be appointment of external, independent moderator can evaluate the objections more efficiently and negate the baseless ones to avoid unnecessary delay in bidding process
  5. Client and Contractors have to work more in an integrated manner
  6. Enhanced transparency, balanced sharing of risks, adequate and timely funding and partnering with a professional EPC contractor having a good hold on long lead equipment deliveries
  7. Technology innovation is mostly misinterpreted here as a costly affair but in reality it can reduce the capex and operational cost over a long period of time. FEED design competition can be proved as a better way to work.
In India we have a mix of clients from PSUs and Private sector and we are comfortable working with both. Our USPs in Indian market are:
  • Combination of proven technologies for value added products and Refinery - Petrochemical Integration
  • Conducting studies to upgrade technologies for improved operation to enhance efficiency of the existing units
  • Project execution capability on License plus EPC basis for all its technologies
  • Manufacturing process technology driven proprietary products
  • Heaters,Burners, Convection Modules, WHB
  • Competency in Offshore Process Platform
We have demonstrated our resilience despite the economic headwinds. Our focuses in current slowdown are:
  • Leverage Technology Competency and R & D leadership to reduce clients project cost
  • Early involvement and fully integrated approach
  • Global footprint
  • Commitment to safety, environment, security and quality
  • Optimizing our cost base and increasing competitiveness
  • Solid backlog
What are the future growth drivers & business opportunities for EPC service providers in India pertaining to its hydrocarbon industry?
In the Hydrocarbon industry, the key growth driver for the Indian EPC service providers in years to come clearly is the hydrocarbon demand to local production gap and the government's policy to reduce hydrocarbon import dependency by 10% in next 5 years. Also, a door of opportunities will open in future for these service providers, with implementation of 'Make in India policy'.

While the above picture looks quite bright, there is a big responsibility on the Indian EPC service providers to execute the projects with truly international class technologies, quality and HSE standards.

Government has now approached PSUs like EIL as EPC contractor for the mega refinery planned on the West Coast of India barring private players, do you think this kind of approach will adverse impact the 'Make in India' campaign?
It is true that PSUs are dominant share in contracting market in India. See, almost all the PSUs' Refinery upgradation works for upgrading the fuel quality of Euro VI are with EIL. But we have to see how EIL is able to cope with the amount of works with its limited manpower because all refineries have to upgrade their fuel quality (BS VI) by 2020. We hope that some of the upgradation works we are able to take part in a comparative environment.

Still compare to the Western world, India has a lot of opportunities for the private players in the form of petrochemicals complexes. Private players have the advantage of cheaper feedstock in India. The only thing is ontime execution of projects which is faced constraints like funding, land acquisition, environmental clearances, etc.

Crashed by the 'no help' nature of the previous licensing policy NELP, recently the government has proposed 'HELP' to boost E & P activities in the country. How will these reforms impact EPC industry in India?
Various policy reforms will attract the E & P companies to do developments in India and this will trigger implementation of new projects, which will be favourable to the Indian EPC industry as well.

At the same time there will be ownership with the E & P companies to maintain efficient operations leading to creation of a positive pressure on CAPEX and OPEX, which will make optimisation drive in the supply chain quite intense.

Tell us about Technip's future strategy in India as an EPC service provider to the country's hydrocarbon industry?
Technip in India, like elsewhere in the world, is keen to support the E & P players and the local hydrocarbon supply chain industry with their excellence in Project execution in all three business segments i.e. Onshore, Offshore and Deepwater subsea.

Our emphasis is on one stop innovative solution offering to our clients to meet world's energy challenges. The solution offering is through our deep understanding of the design and engineering aspects, product lines, installation assets and project execution excellence.