How bp-ONGC Tie-up can Benefit India

Satyesh Bhandari

India’s premier PSU, Oil and Natural Gas Corp (ONGC) announced that BP will provide technical services to boost oil and gas output from the India’s largest producing field, Mumbai High. BP will act as technical service provider to help boost oil and gas output from the country's largest producing field. The field reached a peak production level of 471,000 barrels per day of oil in March 1985, and its output had declined to about 134,000 bpd in April 2024. BP proposed to increase oil production by up to 60% from the field during a 10-year contract period.

BP's role will be to review the field's performance, identify improvement areas (in reservoir management, facilities, and well operations), and implement suitable technological interventions to enhance production.

India, the world's third-biggest oil importer and consumer, wants to quickly raise its domestic oil and gas production, which has been stagnant for years. BP's extensive experience in optimizing mature fields globally is expected to play a crucial role in revitalizing Mumbai High's output.

The partnership between BP and ONGC is expected to yield significant long-term benefits for both ONGC and India by addressing critical challenges in the country’s energy sector.

1. Enhancing Oil and Gas Production

• Boosting Domestic Output: BP's expertise in optimizing mature oil fields like Mumbai High can help significantly enhance production, potentially increasing output by up to 60% over the current baseline levels.
• Reduced Imports: By increasing domestic production, India can reduce its reliance on imports, improving its trade balance and energy security.

2. Knowledge Transfer and Technological Advancements

• Advanced Techniques: BP will introduce cutting-edge technologies and practices in reservoir management, well operations, and infrastructure optimization.
• Skill Development: Collaboration with BP will allow ONGC engineers and technical manpower to gain valuable insights into modern oil extraction and field management practices, strengthening India's technical workforce.

3. Revitalizing Aging Oil Fields

• Efficient Use of Existing Assets: Mumbai High, an aging oil field, has seen declining production over decades. BP's involvement ensures that ONGC can maximize recovery from existing reservoirs, extending the field's productive life. On success, it can help in other fields also to boost production.
• Cost-Effective Solutions: Revitalizing mature fields is more cost-efficient than exploring and developing new ones, allowing ONGC to allocate more resources for exploration and new field discoveries.

4. Strengthening Energy Security

• Stable Supply: Improved domestic production reduces vulnerability to global oil market volatility.
• Strategic Resilience: Enhanced production ensures a steady supply for critical sectors, such as transportation and industry.

5. Economic Benefits

• Revenue Growth for ONGC: Increased production directly translates to higher revenues for ONGC, supporting further investment in exploration and production.
• Job Creation: The collaboration will create opportunities across the supply chain, from field operations to technology support.
• Foreign Collaboration: Successful partnerships can attract other international players to invest in India’s energy sector.

6. Supporting India’s Energy Transition

• Balancing Fossil Fuels and Renewables: While India is pushing toward renewable energy, fossil fuels still account for a significant portion of its energy mix. Maximizing domestic production allows India to transition more smoothly to cleaner energy sources.
• Funds for Green Initiatives: Revenue generated from enhanced oil production can also be redirected toward funding renewable energy projects.

This strategic collaboration aligns with India's broader goals of energy independence, economic stability, and a balanced energy transition while positioning ONGC as a global player in the oil and gas industry.