Krypton_John,
The option to undersling the aircraft exists - in this case they have elected to do an engine change in situ because it's an exercise and it's practice for the REME (a move back to "in the field" soldiering).
In the event of a single engine failure the crew can selectively or completely jettison stores (an SOP in Afghanistan if unable to maintain OEI flight).
The aircraft was carrying full RCEFs (external fuel tanks) and was on the edge of OEI performance. In this case the Ac Comd elected not to jettison external pylon stores and carry out a landing. No.1 engine had lost oil pressure but has run dry capability - the emergency is a Land as Soon as Possible i.e a safe and unhurried landing to the nearest suitable site.