An International EPC Company for Operating in Indian Space

Sunder Kalyanam,
Regional Managing Director - E & C, Petrofac.
Scale, speed and skill are intrinsically important ingredients in India’s future growth; specifically so in the Oil & Gas upstream and downstream industry. India is well positioned to push forward growth initiatives in the upstream, refinery and petrochemical space, says Sunder Kalyanam, Regional Managing Director - E & C, Petrofac.

Aligning with reliable partners can be the catalyst towards a greater realisation of the country's growth dreams. International contractors can bring a wealth of technical and execution experience and are likely to offer the right partnership; supporting a sustainable and local model.

Well established and understood, the lumpsum EPC model has been successfully implemented in the Oil & Gas industry the world over and still continues to be used to great effect. Over time the EPC model has varied but the core, which is 'optimum risk sharing' has remained intact. Globally, clients and contractors alike have been extremely successful in negotiating and tailoring the base lumpsum EPC model to suit specific execution styles and legislative frameworks. This has allowed the parties to focus on the activities within their respective spheres of control and rely upon their partners within the extent of the contract to manage other execution fronts. Simply put, interests have to be aligned at the very outset with one common agenda - delivering a successful project collaboratively; safely, on time and within budget. It is so much more than just executing a contract.

If we look at the illustrations, the scale of things to unfold is clearly ambitious and substantial. That a big wave is set to rise is quite emphatic. What is required is that we are prepared and equipped to ride and harness this wave. Success cannot be realised without skill and speed.

For India the last decade or so has not seen a major push forward in the refinery and petrochemical space; for a variety of perfectly logical and economic reasons. However, one of the consequences of a slowdown in any market can result in local skills erosion and movement of skills away from the local environment. This is where international EPC contractors can offer Pipelines are the roadways of the oil and gas a meaningful partnership, aligning with local businesses and implementing a 'global-local' model to great effect.

With complementary strength and depth being brought into the local market, it provides a great recipe for stimulus. An increased appetite for simultaneous project sanction, as projects would be supported by resources otherwise not immediately available or ready and a significant risk element can be taken up by the international EPC partner businesses.

State owned public sector undertakings and the large private players only stand to benefit if the bidding slate comprises competition from strong and competent national and international EPC contractors. Reputable international lumpsum EPC contractors are financially robust, have a solid and tested reputation for safe project delivery, underpinned by well-honed processes and governance covering all aspects of project execution. This has developed and evolved over the years as a result of exposure to multiple clients in diverse geographies from which best practices have been learned and embedded in business protocols ensuring adherence to high standards of international safety, quality and integrity.

A competent and reputable EPC contractor will offer a strong in-house engineering capability resourced with highly motivated, talented and experienced engineers and designers. This forms the bedrock of EPC delivery. Experienced buyers with exposure to international suppliers will help leverage the relationship built over a period of time and the quantum of ongoing business. Cost and schedule benefits will benefit the end user in securing competitive quotes from the EPC contractor during the bidding phase , and will see delivery assurances in execution. Construction and completions management teams bring in a wealth of construction best practice .

In addition to cost management on projects, HSSE and quality performance and delivery have long been well documented considerations which have the Indian infrastructure/construction industry alarmed. There have been step changes in improvement in HSSE and quality with standards improving at all levels in the supply chain, all the time. Most international firms are operating with best in class auditing requirements and have an established track record which could help local businesses manage their projects with less supervision; the net result being a reduced cost.

India is ambitious, hungry for success on the world stage and is working hard towards realising these goals; attracting the highest quality of investments and corporate interests in the country. International firms bring their particular niche experiences and capabilities in executing multiple commercial models; EPC lumpsum, hybrid EPC with open book procurement, reimbursable convertible to lumpsum. Listening to what a client wants is always extremely important and through an open dialogue, there are numerous ways to achieve optimal commercial outcomes. A number of international contractors also have the capability to bring in finance or work with export credit agencies.

Evolved international contractors having worked with multiple global customers over time have developed tried and tested 'fit for purpose' delivery models with safety, schedule and cost being the pillars of quality delivery. This experience and capability allows customers to award work with basic functional specifications and rely-upon data which competent EPC contractors grow and develop to provide the desired end result. This approach will help gain overall time by cutting short the pre-bid and tendering time and will help the Indian nation realise its dream of 'speed' .

Leadership and empowerment are quintessential for successful project management and project execution. Leadership has to be understood in the context of ownership and self-drive. International contractors are well placed to identify and hire talented current and potential leaders from a larger and diverse international pool due to their reach. A proven track record, the leadership and the lessons learned along the decades of execution are the three of the most important dierentiators for a global delivery firm.

In summary, an international EPC company can fit perfectly well in the current and near-future economic environment and growth ambitions in India. They offer complementary tools and experience to support the local growth path that India is looking forward to. Indian industry needs reliability and assurance from all stakeholders in the path forward.