BP p.l.c. (NYSE: BP) has secured a significant deal with India's state-owned Oil and Natural Gas Corporation (ONGC) to enhance production from the Mumbai High oil and gas field. The agreement, announced on January 10, 2025, involves BP providing technical services to ONGC to increase crude oil and gas production from the field. The deal is expected to generate substantial revenue and contribute to India's energy security.



The partnership combines BP's world-class deepwater exploration and development capabilities with ONGC's project management and operations expertise. The agreement covers a duration of ten years, with BP receiving a fixed fee for the initial two years, followed by a performance-based service fee linked to a share of net incremental production revenue, after recovering costs.

BP projects a significant increase in crude oil and gas production during the period. Crude output is expected to rise by ~44% from 45.47 MMT to 65.41 MMT, while gas production is anticipated to grow by ~89% from 24.94 BCM to 47.22 BCM. The company expects combined oil and gas output to rise by ~60%, from 70.40 MMToe to 112.63 MMToe.

The incremental increase in production is expected to generate up to $10.3 billion in additional oil and gas revenue and up to $5 billion in incremental contributions to the Indian government through royalties, cess, and other levies. The deal is expected to commence in the next fiscal year, with full-scale output targeted by FY28.

The Mumbai High field, discovered in 1974 and operational since 1976, remains India's most prolific oil field. Despite peaking in 1989 at 4,76,000 barrels of oil per day and 28 bcm of gas annually, output has steadily declined. Current production stands at 1,34,000 bpd of oil and 13 bcm of gas, accounting for 38% of India's domestic production. The field holds an estimated 80 million tonnes (610 million barrels) of oil and over 40 bcm of gas, necessitating technological interventions to unlock its remaining potential.

BP's confidence in India's energy market is evident from this strategic alliance. The company's commitment to investing in technology and innovation, combined with its strong financial position, makes it well-positioned to deliver on the expected production increases. Investors can gain exposure to BP's stock via Texas Capital Funds Trust Texas Capital Texas Oil Index ETF (OILT) and Amplify ETF Trust Amplify Natural Resources Dividend Income ETF (NDIV).

BP shares closed lower by 2.23% at $31.12 on Wednesday, January 10, 2025. However, the company's long-term prospects in India and its commitment to driving growth and innovation in the energy sector remain strong.