NEW DELHI: The Union Cabinet on Friday approved a ₹84,084-crore incentive scheme for offshore hydrocarbon drilling. This entails government support of up to 50% of eligible drilling costs or ₹675 crore per well, whichever is lower, for 60 deepwater exploratory units.
The move seeks to reverse declining domestic oil and gas output and reduce India’s vulnerability to global supply shocks like the one after the onset of the West Asia turmoil, which has jacked up India’s energy costs.
The central sector scheme, titled Samudra Manthan National Offshore Exploration Scheme, will run through FY31, and will be India’s most ambitious offshore exploration mission.
It will combine seismic surveys, deepwater and ultra-deepwater drilling, scientific exploration in frontier basins, common production and evacuation infrastructure, manufacturing zones and digital technologies to accelerate new discoveries.
Of the total outlay, ₹43,200 crore has been allocated for offshore exploration, including drilling support. Another ₹28,534 crore will fund offshore data acquisition, comprising ₹12,000 crore for 2D seismic surveys, ₹12,534 crore for 3D surveys and other techniques, and ₹4,000 crore for reprocessing National Data Repository information and deploying artificial-intelligence tools.
The government has also earmarked ₹10,000 crore for common offshore infrastructure to help commercialise discoveries that may otherwise remain unviable, while ₹2,000 crore will support oil and gas manufacturing and services zones. Monitoring, digital interventions, evaluation, human resources and outreach will receive ₹350 crore.
“Samudra Manthan will boost domestic hydrocarbon production, provide momentum to our thrust towards energy security, and support the nation’s vision of becoming energy secure,” Petroleum Minister Hardeep Singh Puri said.
The programme would promote technology adoption, capacity building and global collaboration while reducing India’s dependence on imported energy, he added.
Deepwater exploration carries high geological and financial risk because not every well results in a commercial discovery. A single deepwater exploratory well can cost around $125-150 million, while the period between the award of a block and commercial production typically ranges from five to 10 years.
Existing Indian oil and gas fields also face a natural production decline of 6-7% annually, making sustained exploration and fresh discoveries necessary even to maintain current output.
Subject to exploration success, the scheme aims to increase annual domestic oil and gas production from around 62 million tonnes of oil equivalent to 80 MMTOE and expand India’s hydrocarbon resource base from 1.6 billion tonnes of oil equivalent to 2.2 billion TOE.
The government expects the programme to add more than 600 MMTOE of hydrocarbon resources. The additional production could reduce crude oil imports by nearly ₹1 lakh crore annually.
India imports about 88% of its crude oil and roughly half of its natural gas requirements. Its annual crude import bill is nearly $144 billion, or around ₹13 lakh crore. The recent West Asia conflict and resulting supply disruptions have renewed the policy focus on domestic production and energy resilience.
Rajnish Gupta, Partner, Tax and Economic Policy Group at EY India, said the outlay sent an “unambiguous signal” that domestic offshore exploration had become a national priority.
India had not made a discovery comparable in scale to Mumbai High, the Krishna-Godavari basin or the Barmer basin in decades, while large parts of its sedimentary basins remained underexplored, he said.
“The availability of seismic data, together with exploratory well logs, can de-risk exploration activities. Shared infrastructure for production and evacuation can lower the breakeven for blocks that may otherwise be seen as marginal,” Gupta said.
Strong geological data or a major discovery could attract private and international capital far beyond the government’s expenditure, he added.
The scheme follows the removal of more than 99% of earlier offshore no-go areas, opening over one million square kilometres of India’s Exclusive Economic Zone for exploration. It also builds on revenue-sharing contracts, the Open Acreage Licensing Policy and the Oilfields (Regulation and Development) Amendment Act, 2025.
Source: The Financial Express
