Govt asks ONGC to hand over 60% stake in Mumbai High and Bassein oil fields to foreign firms

India’s petroleum ministry has told ONGC to give away 60% stake plus operating control in India’s largest oil and gas producing fields of Mumbai High and Bassein to foreign companies. 

As per a Business Standard report, Amar Nath, additional secretary (exploration) in the Ministry of Petroleum and Natural Gas, has written a 3-page letter to ONGC Chairman and Managing Director Subhash Kumar, saying productivity of the Mumbai High and Bassein & Satellite (B&S) offshore assets under state-owned firm was low and international partners should be invited and given 60 per cent participating interest (PI) and operatorship.

This is the second time since April that Nath, who is part of the ONGC management as the longest-serving government nominee director on its board and often considered a potential candidate to replace Kumar next year, has written an official letter, painting a poor picture of the company’s performance.

According to the October 28 letter, the redevelopment projects will raise recovery of the mature and continuously declining Mumbai High field from 28 per cent to 32 per cent, “which is quite low”.

“The field has substantial potential to contribute to domestic production,” he said adding the infrastructure such as pipelines and platforms on the fields are “ageing and leaking and need replacement/revamping”.

“The ONGC will, however, find this challenging as its improvement/development projects have lagged behind schedule. Procedural aspects and other constraints will not encourage ONGC to take quick decisions,” the letter said.

The company “should bring a joint venture partner of international experience and farm out 60% PI (productivity index) and operatorship of the field,” he wrote.

The letter envisages Bassein field, the largest gas producing field in India, top raise recovery to 70% from the current low of 45%. “ONGC should plan to invite experienced international partners and give 60% PI and operatorship,” he added. Mumbai High, which was discovered in 1974, and B&S, which was put into production in 1988, are Oil and Natural Gas Corporation’s (ONGC) mainstay assets, contributing two-thirds of its current oil and gas production.  Nath also reiterated his earlier demand for ONGC to “divest its drilling and well services arms” to become asset lite and increase capital efficiency.

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