New Delhi: US giant Marathon Oil pledging investments and technology to raise output from Mumbai High oil and gas fields, companies such as Occidental Petroleum seeking a stake and at least two privatisation bids have seen final culmination in global energy giant BP signing up to lift output from India’s prime field lying off the Mumbai coast.
State-owned Oil and Natural Gas Corporation (ONGC) last month signed a technical service contract with BP to reverse declining output from the ageing field, according to statements by the two firms. BP has pledged to lift oil production by 44 per cent and gas output by 89 per cent from India’s largest field in exchange for a fixed fee.
The BP deal is exactly on lines of the one ONGC had in 1998-99 signed with Marathon Oil Corporation, according to company insiders and industry sources.
Just like BP, Marathon wasn’t getting any stake in the field but only a pre-agreed share in the incremental oil and gas production over a defined baseline. But unlike BP, Marathon was to make its own investments in technological changes needed to boost output.
In the BP deal, ONGC will make all investments and the London-headquartered firm is only to give technical advice. For the first two years, BP will get a fixed fee for its advice and thereafter a share of the incremental oil and gas.
“BP has no skin in the game. Marathon was not to be reimbursed the amount it invested if the production did not increase,” a source with knowledge of the matter said.
ONGC had signed a memorandum of understanding with Marathon but the US energy giant walked out of it when baseline was changed in the documents submitted to the Ministry of Petroleum and Natural Gas for approval.
“ONGC never achieved the baseline production indicated in the revised documents,” the source said.
Other than Marathon, few other global energy giants too were interested in Mumbai High but they wanted a stake which the law did not provide for.
Those that eyed a stake in the production sharing contract (PSC) included Shell and Occidental Petroleum, industry sources said.
With the field seeing a steady decline in output, a stake sale had been considered on at least two occasions in recent years but it could not go through because of stiff opposition from ONGC management.
A high-level committee headed by the then Niti Aayog Vice Chairman Rajiv Kumar in late 2018 considered “transferring” western offshore oil and gas fields of Mumbai High as also some fields in Mumbai offshore, Assam, Rajasthan, and Gujarat to private/foreign companies. The oil ministry twice in 2021 told ONGC to give away 60 per cent stake, plus operating control of Mumbai High and Bassein fields to foreign companies.
ONGC had in June last year floated a tender seeking advanced recovery technologies and expertise from foreign firms 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 2024. The tender called for bids from companies that had a minimum revenue of USD 75 billion.
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.
ONGC last month said it selected BP as its technical service provider to assist in boosting output from a baseline crude production of 45.47 million tonnes and 70.40 billion cubic metres of gas.