ONGC Expects USD 10.3 Billion Revenue Increase Through BP Partnership in Mumbai High Field

Oil and Natural Gas Corporation (ONGC) anticipates a revenue increase of USD 10.3 billion from enhanced oil and gas production. This boost is expected through collaboration with BP in the Mumbai High field. ONGC has engaged BP Exploration Alpha Ltd, a subsidiary of BP Plc, as the technical service provider (TSP) to elevate production levels in the Arabian Sea's Mumbai High field.

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The TSP predicts a significant rise in crude oil output by about 44%, increasing from 45.47 million tonnes to 65.41 million tonnes. Gas production is also expected to surge by approximately 89%, from 24.94 billion cubic metres to 47.22 billion cubic metres over a decade-long contract period. This increase translates to a 60% rise in oil and gas equivalent, from 70.40 million tonnes to 112.63 million tonnes.

Production Enhancement Strategy

The anticipated production growth will become evident in the fiscal year 2025-26, with full-scale visibility by the fiscal year 2027-28. This additional output is projected to generate up to USD 10.30 billion in net revenue and contribute USD 5 billion to government coffers through royalties and other levies.

In June last year, ONGC sought foreign partners to counter declining output at Mumbai High fields by offering revenue shares from increased production without equity stakes. BP and Royal Dutch Shell expressed interest, but only BP submitted a final bid detailing the expected production increase and revenue share.

Technical Service Provider Role

BP Exploration Alpha Ltd emerged as the chosen TSP after evaluating bids. The TSP will assess field performance, identify reservoir improvements, and enhance facilities and wells to boost Mumbai High field production. ONGC stated that TSP would receive a fixed fee for the first two years, followed by a service fee based on a percentage of net incremental hydrocarbon production revenue after cost recovery.

ONGC aims to unlock Mumbai High's potential using advanced technologies and global best practices, ensuring its continued contribution to India's energy sector. As India's national oil company, ONGC plays a vital role in meeting growing energy demands, contributing around 75% of domestic crude oil and natural gas production.

Mumbai High Field Overview

Mumbai High (MH), discovered by ONGC in 1974 and operational since 1976, is located offshore near Mumbai in the Arabian Sea. It reached peak production in 1989 with 476,000 barrels of oil per day and 28 billion cubic metres of gas but has since experienced declining output.

Currently, MH produces about 132,265 barrels of oil daily and around 13 billion cubic metres of gas annually. Without intervention, this output could drop to approximately 75,000 barrels per day of oil and less than 4.5 mmscmd of gas by 2037-38.

Efforts to Boost Production

ONGC has implemented various strategies over the years to enhance MH field production, such as gas and water shut-off jobs, side-tracking poor producers, water injection support enhancement, gas-lift techniques, and infill drilling. Despite these efforts, challenges persist, necessitating advanced interventions.

To address these challenges and maximise MH's potential, ONGC issued an international competitive bidding (ICB) tender for a technical services provider with expertise in managing mature reservoirs and implementing advanced recovery technologies.

BP's Involvement

BP stated that as TSP, it will conduct a thorough review of field performance and implement technological interventions to improve production and recovery from this crucial national resource. The Mumbai High field accounts for nearly 25% of India's production.

The field is estimated to have remaining reserves of 80 million tonnes (610 million barrels) of oil and over 40 bcm of gas. BP will advise ONGC on recovery technologies aimed at stabilising production and reversing decline trends.

Kartikeya Dube, BP India head, expressed enthusiasm about partnering with ONGC: "We are excited to partner with ONGC and look forward to bringing our international experience and technical expertise to this project." This collaboration underscores BP's commitment to India's energy independence vision.