Govt wants ONGC to divest 60% in Mumbai offshore assets

By: |
November 02, 2021 6:00 AM

Discovered in 1974, Mumbai High is currently the biggest oil field under production in the country, holding 13.27 billion barrels of oil and expected to be in operation till 2040.

ONGCPointing out that ONGC’s contribution in the country’s crude oil consumption has “declined drastically to a paltry 9%” in FY21

The Union ministry of petroleum and natural gas has asked state-run oil and gas producer Oil and Natural Gas Corporation (ONGC) to consider divesting 60% stake in the country’s largest producing oil and gas assets in Mumbai offshore.

In a letter to ONGC chairman Subhash Kumar, MoPNG additional secretary Amar Nath suggested the company “bring a joint venture partner of international experience and farm out 60% participating interest and operatorship” of the Mumbai High field and offer similar stake to foreign players in the Bassein and Satellite asset, also located in Mumbai offshore.

Discovered in 1974, Mumbai High is currently the biggest oil field under production in the country, holding 13.27 billion barrels of oil and expected to be in operation till 2040.

The field has the potential to produce much more in its lifetime than what is planned by ONGC, but requires deployment of capital-intensive technologies. “The infrastructure such as pipelines and plafforms, etc, which are ageing and leaking, need replacement and revamping,” the letter, reviewed by FE, stated. Despite the Cabinet allowing national oil companies to form joint ventures to enhance production way back in February, 2019, ONGC is yet to initiate process for partnerships, Nath noted.

Pointing out that ONGC’s contribution in the country’s crude oil consumption has “declined drastically to a paltry 9%” in FY21, MoPNG said that “there is an urgency for ONGC now, to prepare a 25 years energy plan to remain a flag bearer on energy front”, adding that to expand exploration sector in the country and increase its own capital efficiency, ONGC must divest its drilling and well services arms by various modes, including start-ups and investment trusts. The B&S is largest gas producing field in lndia holding around 800 billion cubic metres of gas, which commenced production in 1988.

The country’s state-run national oil companies have been looking for international players to ramp up domestic oil and gas production to reduce the dependency on imports. Prime Minister Narendra Modi recently interacted with the heads of major global oil companies, including Rosneft’s Igor Sechin, Saudi Aramco’s Amin Nasser, BP’s Bernard Looney, RIL chairman Mukesh Ambani and Vedanta chairman Anil Agarwal. Import dependency of natural gas stood at 49% in April-September, while around 85% of the country’s crude oil requirement has to be imported.

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