London-based BP wins ONGC contract to boost Mumbai High production

UK-based global energy major BP on Wednesday won the bid to boost production from state-owned Oil and Natural Gas Corporation’s (ONGC) flagship Mumbai High field, which has been witnessing a steady decline in output.

 

Part of the 116,000 sq km Mumbai Offshore Basin in the Arabian Sea, Mumbai High is India's largest oilfield that has been operational since 1976.

 

“The London-incorporated BP Exploration (Alpha) Ltd, a wholly-owned step-down subsidiary of BP Plc has been chosen as a Technical Services Provider (TSP) to enhance recovery from the mature oilfield, ONGC informed the exchanges.

 

“The TSP has indicated a substantial increase in the oil + oil equivalent gas production (up to 60 per cent) from the baseline production levels (reputed third-party vetted production estimates with natural decline) over a 10-year contract period,” ONGC said.

 

In June last year, ONGC floated a tender seeking foreign partners to reverse declining output at  Mumbai High fields, offering a share of revenue from incremental production plus a fixed fee but not any equity stake. The tender faced criticism of privatisation from some ONGC officers and opposition parties, who earlier questioned the government over handing over control of the oilfield, in Parliament.

 

But petroleum ministry officials refuted claims last year, arguing the government was not handing any equity stake to a foreign partner, instead seeking to only reverse declining output. 

 

"The TSP will review the field performance and identify improvements in reservoir, facilities and wells to enhance the production from MH field," ONGC said.

 

Meanwhile, ONGC has stated the ICB tender invited bids from international operators with proven technical expertise, financial strength, and a track record in similar projects, and an annual revenue of at least $75 billion.

 

BP, the sixth-largest global supermajor in oil, already has an active presence in India's oil and gas exploration and production sector.

 

As part of the partnership with Reliance Industries Limited (RIL), BP also operates 1,900 fuel retail stations across India and produces oil and gas from a deepwater block in the Krishna-Godavari basin.

 

"We look forward to bringing our long experience of optimising performance and recovery from major mature fields around the world to help unlock and enhance production from Mumbai High, India's largest oil & gas field (25 per cent of India’s oil production). We look forward to working with ONGC to create value for both the country and the companies involved, and supporting India’s increasing energy needs,” William Lin, EVP Gas and Low Carbon Energy at BP said.

 

Foreign exploration and production majors have struggled to break ground in India, struggling due to regulatory hurdles, lack of viable reserves, and India's evolving energy policies. BP had acquired a 30 per cent stake in 21 oil and gas blocks from Reliance Industries for $7.2 billion in 2011.

 

However, only a few blocks proved commercially viable, forcing BP to relinquish several blocks by 2016.