SP Armada Oil Exploration Private Ltd, a joint venture between Malaysia's Bumi Armada Bhd and India's Shapoorji Pallonji group, has bagged a contract from India's state-run Oil and Natural Gas Corp Ltd (ONGC).

SP Armada Oil Exploration received the US$ 740 million contract from ONGC for the charter hiring of a floating production, storage and offloading vessel (FPSO) west of Mumbai in India, according to Bumi Armada. The contract involves hiring an FPSO with minimum storage of 510,000 barrels of oil that will be operated in Cluster-7 field located 210km off the western coast of Mumbai, India.

Bumi Armada said in a statement that, "Together with our partners, the Shapoorji Pallonji group, we are looking forward to further strengthening our relation with ONGC."

ONGC has awarded the contract, which is for a fixed period of nine years, for the development of second such vessel to be developed in India. The company has been awarded with an US$ 340 million extension option of an additional seven years on yearly basis.

The contract is the sixth FPSO order for Bumi Armada and is a second for ONGC. Analysts said that ONGC is likely to fully exercise the extension option, contributing to the increased revenues for the SP Armada Oil Exploration.