Larsen & Toubro, country’s largest engineering company, along with its Malaysian partner SapuraCrest Petroleum has bagged orders worth $500 million to undertake installation of platforms and pipelines in offshore. The joint venture partners have invested $175 million to acquire a vessel to execute the orders.
Speaking to reporters today at Chennai A M Naik, Chairman and Managing Director, L&T said that the company along with SapuraCrest Petroelum Berhad, Malaysia floated a company Offshore International FZC in 2007. While L&T has 60 per cent equity in the JV, SapuraCrest Petroleum holds 40 per cent stake. The purpose of JV is to take up installation platforms and pipelines.
For the last 20 years L&T has been outsourcing this project to a third party. In 2007 it was decided to enter into the space along with a partner.
The company, Offshore International FZC, currently have orders worth $500 million (around Rs 2,300 crore), which will be executed in five years, said Nayak. The recent one was from Oil and Natural Gas Corporation (ONGC), which is valued around $75 million.
Datuk Shahril Shamsuddin, president and chief executive officer, Sapura Group of Companies added that the JV partners have invested $175 million to build, own and operate LTS 3000, a derrick lay vessel to undertake installation of platforms and pipelines.
The investment was funded through Debt and Equity, out of 70:30 of the equity L&T has invested 60 per cent, while 40 per cent was from Sapura.
Construction of LTS 3000 is completed and the vessel is expected to undergo sea trials at the end of January 2010 and delivery is expected to take place by mid February 2010. The vessel is scheduled to undertake installation of the structures under the Rs 5,500 crore MHN project for ONGC, stating mid November 2010. The vessel is expected to first go to work in Malaysian waters starting mid March 2010.
The new vessel will cater to oil and gas engineering, procurement, installation, construction and services. The vessel will provide offshore installation services including subsea piple lay and platform installation opportunities, across India, Middle East, South East Asia, Australia and Sakhalin region.
Shamsuddin added, the JV company already over booked and will look for acquiring similar vessel. The company will also use its three of the barges, owned by SapuraCrest, if it required. Currently the company has orders worth $1.2-$1.3 billion orders to execute.
Meanwhile Nayak added that the proposed shipbuilding facility at Ennore, being set up by L&T with an investment of around Rs 1,500 crore, will build vessels for Defence, which will be our most important and priority. “We have 900 acre of land, if demand for vessels for LTS 3000 is high, we will also consider manufacturing here,” said Nayak.
