Shares of Oil and Natural Gas Corporation (ONGC) saw a significant rise of 3% on Wednesday, following the announcement that UK-based BP Plc had successfully won a bid to enhance production at ONGC’s giant Mumbai High oil and gas field. BP’s proposal promises to increase crude oil production by 44% and natural gas production by a remarkable 89% over a decade.
However, the excitement surrounding the announcement was short-lived. On Thursday morning, ONGC’s shares saw a sharp dip, falling nearly 2.5% to reach Rs 264.65, reflecting a market correction following the initial rally.
On Wednesday, the stock surged by 2.94% to settle at Rs 271.25 on the Bombay Stock Exchange (BSE), while at the National Stock Exchange (NSE), shares rose 3% to Rs 271.50. During the trading session, ONGC shares peaked at Rs 273.45.
In an official filing to the stock exchanges, ONGC confirmed the selection of BP Exploration (Alpha) Ltd, a wholly-owned subsidiary of BP Plc, as the Technical Service Provider (TSP) for the Mumbai High field. BP’s role will involve reviewing the field’s performance and identifying improvements in the reservoir, facilities, and wells to increase production levels.
ONGC had floated a tender in June last year, inviting foreign partners to help reverse the declining output from its flagship Mumbai High fields. BP and Royal Dutch Shell expressed interest, but Shell did not submit a final price bid, leaving BP as the sole bidder.
BP’s bid outlines an ambitious plan to boost production from the field, with an estimated 44% increase in oil output and up to a 60% rise in total production, including gas, over a 10-year contract period. BP will have two years to demonstrate the ability to raise production above the agreed baseline output, as per the contract terms.
This strategic partnership with BP aims to rejuvenate one of India’s largest oil fields and boost ONGC’s overall production, marking a key development for the company and its future growth prospects.
