This paper reports the oxygen corrosion of heat exchanger tubes serviced in dilute steam generation system. The floating head heat exchanger employed in a petrochemical industry underwent remnant corrosion failures particularly at lower passes of tube bundle. Initially remote field eddy current inspection technique was employed for tube bundle conditional assessment and further, root cause of degradation of tube had been analyzed. Comprehensive experimental techniques including visual examination, tube chemistry analysis, external tube surface morphological analysis, elemental mapping, scanning electron microscopy, light microscopy and x-ray diffraction studies were employed. The tube surface at the degraded position with its cross sectional examination was rigorously evaluated as well. Moreover, actual steam parameters such as pH, conductivity and iron & chloride concentration have been monitored in the petrochemical facility. The detailed analysis concluded that dissolved oxygen in boiler feed water (BFW) was the root cause for corrosion failure. Several other foreign elements were detected and source of each element was discussed in the context of actual heat exchanger operating conditions. Simulated conditions of BFW service have electrochemically been evaluated in two different dissolved oxygen concentrations at 7.5 ppm and 12.7 ppm, respectively. Even small increase of dissolved oxygen in BFW could lead to promotion of oxygen reduction reaction. Theoretically SA179 tubes operated at pH of 9.75 could lead to formation of bicarbonate and it could protect the tube in absence of dissolved oxygen as evaluated by Molecular Dynamics simulation. However, according to obtained results, tube has been degraded due to presence of dissolved oxygen in BFW. Various contributing factors such as external paint/coat removal, absence of de-aerator system in BFW treatment and improper corrosion inhibitor programme were discussed. Several practical countermeasures have been suggested to mitigate oxygen corrosion failure in petrochemical refineries.