Inside ONGC’s call for foreign companies at Mumbai High - Hindustan Times
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Inside ONGC’s call for foreign companies at Mumbai High

ByRajeev Jayaswal
Jun 20, 2024 01:41 PM IST

The six-member committee, which was constituted by ONGC on May 16, took just 14 days to conclude that the field was facing “alarming rate of production decline”

State-run Oil and Natural Gas Corporation’s (ONGC) decision to invite a tender on June 1 to engage an international firm to enhance oil production from its flagship Mumbai High came after an in-house committee on May 30 said the oil field was facing an “alarming state of decline”, according to documents seen by HT.

The in-house committee was constituted by ONGC’s director-production on May 16 amid the ongoing general elections, and the tender was floated three days before the poll results were declared.
The in-house committee was constituted by ONGC’s director-production on May 16 amid the ongoing general elections, and the tender was floated three days before the poll results were declared.

The six-member committee, which was constituted by ONGC on May 16, took just 14 days to conclude that the field was facing “alarming rate of production decline and suboptimal performance of decline-arresting measures by ONGC”. It suggested that the company “publish an NIO (notice inviting offer or tender) pending sanction”. HT has reviewed a copy of the report. Mumbai High (MH), formerly Bombay High, is a giant offshore oil and gas producing field active for over four decades, which is located at 165km off the Mumbai coast.

That the tender was raised days before a new government was to be formed at the Centre has led to doubts being raised by auditors and experts, according to people aware of the matter.

Two officials with direct knowledge of the matter said on condition of anonymity that ONGC should have waited for the formation of the government at the Centre and for the “explicit approval of the competent authority” before floating the tender of a service contract for the national asset to a private entity for about 15 years.

“The MH field is a prized national asset and post-facto approvals of competent authority for such important public assets should be avoided,” one of them said. “It is not as per the CVC [Central Vigilance Commission] guidelines,” one official said.

The in-house committee was constituted by ONGC’s director-production on May 16 amid the ongoing general elections, and the tender was floated three days before the poll results were declared. “Ideally, ONGC should wait for the new government to assume charge,” a second official said.

The Modi 3.0 government took over the charge on June 9. ONGC, its director-production, the petroleum ministry, CVC, and the Comptroller and Auditor General (CAG) of India did not respond to email queries on this matter.

“The committee also proposed ONGC to engage KPMG as consultant to advise on the engagement of TSP (technical service provider) and develop a business model on a nomination basis [without inviting open bids] to avoid any delay, which is also in contravention of Central Vigilance Commission norms,” the second official said.

“It is recommended to engage M/s KPMG as commercial /managerial /legal consultant on nomination basis for a period of 12 months,” the committee said in its report.

According to a June 5 post on X, ONGC said that it was “keen to engage an internationally proven Technical Service Provider to enhance production from its maturing Mumbai High field on the Arabian Sea”. The service provider would be identified through an international competitive bidding (ICB), already floated on June 1, 2024, with due date for bid submission on September 15, 2024, it added.

“The giant multi-layered Mumbai High field, which commenced production 48 years ago in 1976, is currently in its mature stage of production, and ONGC has implemented a number of schemes in this field to improve production. Mumbai High is one of the prime assets of ONGC and significant upside is still to be unlocked here if ONGC applies best-in-class reservoir management technologies and adopt globally best operational and management practices,” ONGC said in the post.

As a custodian and operator of Mumbai High field, ONGC is keen to collaborate with a global TSP, it said. “The service provider would be contracted 10 years, extendable by another five years,” it added.

“The identified service provider would carry out a comprehensive review of field performance and identify improvements in Wells, Reservoir including water injection, and Facilities Management (WRFM). It would suggest and help implement suitable technological interventions to improve production. Integrated reservoir / FEED studies and development of detailed work plan for field development would also be within the scope of work,” it said.

All international oil and gas majors, with an annual revenue above $75 billion, are invited to participate in this ICB, it added.

The Mumbai High field had a peak production of 471,000 barrels of oil per day (BOPD) in March 1985, which fell to 176,000 BOPD in April 2018 and 134,000 BOPD in April 2024. According to an estimate, it still has very significant oil reserves (OOIP of 1,821.28 MMT).

Former ONGC Videsh Ltd managing director NK Verma said: “This is not only the bread and butter of ONGC, but also a crown jewel of India. It must not be given away to multinationals for 15 years when ONGC has in-house talent. It only needs will power and the government’s support. All technologies and resources are globally available and also accessible to ONGC.”

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