BP partnership to increase ONGC revenue by $10.3 billion

New Delhi: State-owned Oil and Natural Gas Corporation (ONGC) expects a $10.3 billion (approx. Rs 88, 477.51 crore) revenue boost from increased oil and gas production, achieved through a partnership with UK's British Petroleum (BP) in the Mumbai High field.

In a statement, ONGC said it has hired BP Exploration (Alpha) Ltd, a wholly-owned step-down subsidiary of BP Plc, as the technical service provider (TSP) for raising production from the Mumbai High oil and gas field in the Arabian Sea.

"TSP has indicated a substantial potential increase of approximately 44 per cent in crude oil (from baseline production of 45.47 million tonnes to 65.41 million tonnes) and approximately 89 per cent increase in gas production (from 24.94 billion cubic metres to 47.22 billion cubic metres) for the ten-year contract period," it said.

In terms of oil and oil equivalent gas, the increase works out to 60 per cent (from 70.40 million tonnes of oil equivalent to 112.63 million tonnes of oil equivalent).

"The increase is expected to be visible from FY26 (April 2025 to March 2026 financial year) with full scale visibility expected from FY28 (April 2027 to March 2028 fiscal). This incremental production is expected to generate additional oil and gas revenue (net of levies) of up to $10.30 billion and incremental contribution to government exchequer by way of royalty, cess and other levies up to the tune of $5 billion (approx. Rs 42,957.65 crore)," the statement said.

ONGC had in June last year floated a tender seeking foreign partners to reverse declining output at its flagship Mumbai High fields, offering a share of revenue from incremental production plus a fixed fee but not any equity stake.

BP and Royal Dutch Shell put in an Expression of Interest (EoI) at the close of the tender in September.

Shell, however, did not put in the final price bid, which was to detail the incremental production and the revenue share sought from it. BP was the only firm that put in the bid.

"After the bid evaluation process, BP Exploration (Alpha) Ltd, a wholly-owned step-down subsidiary of BP Plc, UK has been selected as TSP. The TSP will review the field performance and identify improvements in reservoir, facilities and wells to enhance the production from Mumbai High field," the statement said.

ONGC said TSP will receive a fixed fee for the first two years, followed by a service fee based on a percentage share of the revenue from net incremental hydrocarbon production, after recovering incremental costs.

"By engaging a TSP, ONGC aims to realise the enhanced potential of Mumbai High field by leveraging cutting-edge technologies and global best practices, securing its future contribution to India's energy landscape," it said.

The state-owned firm said India's exploration and production (E&P) sector is vital for meeting the nation's growing energy demands, driven by rapid economic growth.

Being the national oil company (NOC), ONGC plays a crucial role, contributing around 75 per cent of the country's domestic crude oil and natural gas production.

Mumbai High (MH), a prolific multi-layered field located in the Mumbai offshore area, was discovered by ONGC in 1974 and started production in 1976. The field, which lies some 160 kilometres in the Arabian Sea off the Mumbai coast, hit a peak of 4,76,000 barrels of oil per day and 28 billion cubic metres of gas in 1989 and has since seen a gradual decline in output.

The field currently produces around 1,32,265 barrels of oil per day and around 13 billion cubic metres of gas (less than 10 million standard cubic metres per day or mmscmd).

This output was projected to decline to about 75,000 bpd of oil and less than 4.5 mmscmd of gas by 2037-38.

"While ONGC focuses on unlocking the potential of new hydrocarbon resources through greenfield projects, enhancing recovery from mature fields like MH also remains a top priority for increasing domestic production," the statement said.

Over the decades, ONGC has implemented various enhancement schemes in the MH field to boost production and recovery. Various measures like gas and water shut-off jobs, side-tracking poor producers, enhancing water injection support, gas-lift, and infill drilling have been implemented to maintain production. However, the field continues to experience production related challenges, necessitating more advanced interventions.

"In order to overcome these challenges and to realize the full potential of MH, ONGC issued an international competitive bidding (ICB) tender to engage a technical services provider (TSP) for Mumbai High field with expertise in managing complex mature reservoirs and implementing advanced recovery technologies and best operational practices.

"Through this ICB tender, ONGC invited international operators with proven technical expertise, financial strength, and a track record in similar projects. All the major international oil companies were invited to participate. Shell and BP expressed their interest and participated in the pre-bid process and the final bid was submitted by BP," the statement added.