BP Plc wins bid to operate ONGC’s Mumbai High fields

Tender seeking foreign partners to reverse declining output at Mumbai High fields had attracted two bidders—Royal Dutch Shell backs out

New Delhi: BP Plc has won a bid to operate ONGC’s giant Mumbai High oil and gas field by offering up to 60 per cent increase in output over baseline, the state-owned firm said on Wednesday.

State-owned Oil and Natural Gas Corporation (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.

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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 the technical service provider (TSP),” ONGC said in a stock exchange filing.

“The TSP will review the field performance and identify improvements in reservoir, facilities and wells to enhance the production from Mumbai High field. The TSP has indicated a substantial increase in oil plus oil equivalent gas production (up to 60 per cent) from baseline production levels (reputed third-party vetted production estimates with natural decline) over 10 years contract period.”

ONGC said it had issued an international competitive bidding (ICB) tender on June 1, 2024, to engage a TSP for Mumbai High Field with expertise in managing complex mature reservoirs and implementing advanced recovery technologies and best operational practices.

ONGC sought bids from firms with annual revenue of at least $ 75 billion, according to the tender document. The TSP would have to do a comprehensive review of the field performance and identify improvements as well as implement suitable technological interventions and practices for improving production and recovery, it said.

Bidders were asked to quote quarterly incremental production they can enable over the 10-year contract period as well as the percentage share of the revenue they want from the sale of oil and gas produced over and above the baseline production. ONGC did not disclose the bid details.

The Mumbai High field (previously Bombay High field) — India’s most prolific oil field — lies some 160-km in the Arabian Sea off the Mumbai coast. It was discovered in February 1974 and started production on May 21, 1976.

The field 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. It is currently producing 1,34,000 bpd of oil and 13 bcm (less than 10 million standard cubic metres per day) of gas — accounting for almost 38 per cent of India’s production and 14 per cent of consumption.

ONGC believes the field still has a balance reserve of 80 million tonnes (610 million barrels) of oil and over 40 bcm of gas and hence needs partners who can help tap them.

With the field seeing a steady decline in output, a stake sale had been considered on at least two occasions in recent years. But that plan met with strong opposition from ONGC and some quarters within the government, three sources with knowledge of the matter said.