Cabinet approves offshore exploration scheme

The Union Cabinet on Friday approved the Rs 84,084-crore “Samudra Manthan” National Offshore Exploration Scheme to partly fund the high cost of finding oil and gas in deepwater areas, drilling exploratory wells and building common infrastructure to bring new discoveries into production.

Under the scheme, the Government will provide support of up to Rs 650 crore for each well drilled in deepsea and ultra-deepsea areas, officials said, as part of efforts to boost domestic oil and gas output and reduce reliance on imports.

More than half of the scheme’s total outlay, or Rs 43,200 crore, will be allocated over five years through 2031 to support deepsea drilling, an activity involving high costs and significant geological risks as not every exploratory well results in a commercial discovery.

Another Rs 10,000 crore has been earmarked to partially fund common infrastructure needed to bring discovered oil and gas reserves into production. The scheme also provides Rs 28,534 crore for offshore data acquisition and Rs 2,000 crore for developing oil and gas manufacturing and services zones.

Drilling in ultra-deepwater areas, where water depths exceed 1,500 metres, can cost between $100 million (about Rs 950 crore) and $250 million (around Rs 2,400 crore) per well, with no certainty that the investment will result in a discovery or contribute to higher domestic production.

The Government expects the scheme to accelerate exploration in offshore basins, attract investment and help unlock India’s offshore hydrocarbon potential, according to an official statement.

India’s reliance on imported crude oil, the key raw material used to produce fuels such as petrol and diesel, has increased over the past decade from 77 per cent to 88 per cent. The country also imports around half of its natural gas requirements, which is used in sectors including fertiliser production, power generation, compressed natural gas (CNG) for vehicles and piped cooking gas supplies to households.

The recent conflict in West Asia, which disrupted energy supplies, highlighted the vulnerability of import-dependent economies and renewed focus on strengthening domestic production capacity. “The Union Cabinet chaired by the Prime Minister Narendra Modi has approved ‘Samudra Manthan’ - the National Offshore Exploration Scheme, a Central Sector Scheme of the Ministry of Petroleum & Natural Gas with an approved outlay of Rs 84,084 crore for implementation up to FY 2030-31,” the statement said.

The scheme aims to step up exploration in deepwater and ultra-deepwater areas through large-scale seismic surveys, exploratory drilling, scientific drilling in frontier basins and the development of common offshore production and evacuation infrastructure.

The programme also provides for the creation of an integrated oil and gas manufacturing and services zone, along with investments in digital programme management, technology adoption, capacity building, stakeholder engagement and international collaboration to support offshore exploration and production, it said.

India’s oil and gas output has been under pressure due to the natural decline of ageing fields, while limited investment in frontier basins with potential for fresh discoveries has constrained production growth. Against this backdrop, the Government has allocated funds for a five-year programme through FY2030-31 to accelerate offshore exploration and develop supporting infrastructure. The scheme is aimed at supporting seismic surveys, deepwater and ultra-deepwater drilling, exploration in frontier basins and the creation of common offshore production and evacuation facilities.

The Government expects the scheme to help discover more than 600 million tonnes of oil equivalent (MMTOE) of hydrocarbon reserves, increase domestic oil and gas production, generate employment, strengthen domestic manufacturing and attract investments across the exploration and production value chain.

The approval builds on a series of upstream sector reforms undertaken over the past decade, including opening almost the entire offshore acreage for exploration, modernising the legislative and contractual framework and strengthening the National Data Repository.

The Government said the scheme would accelerate offshore exploration through strategic public investment, advanced technologies and common infrastructure as India seeks to reduce its reliance on imported oil and gas and improve long-term energy security.

The scheme was first outlined by Prime Minister Narendra Modi during his Independence Day address in 2025, when he called for a modern-day ‘Samudra Manthan’ to unlock India’s offshore energy resources.

India has overhauled its oil and gas exploration policy three times since 1997, moving away from Production Sharing Contracts (PSCs) that let companies recover costs before splitting profits with the Government, toward a system based on revenue sharing and exploration commitments.

The Hydrocarbon Exploration and Licensing Policy (HELP), adopted in 2016, replaced PSCs with Revenue Sharing Contracts (RSCs), under which the Government’s take is based on gross revenue rather than costs, eliminating cost-recovery disputes.  HELP also introduced the Open Acreage Licensing Policy (OALP), letting companies propose blocks year-round instead of waiting for bid rounds, along with a uniform licence, and marketing and pricing freedom.

The Government later introduced a hybrid model to boost exploration in undercommercialised basins: unexplored areas within producing basins are still bid out on a revenue-sharing basis but with greater weight given to companies’ proposed work programmes, while blocks in basins with no commercial production are awarded purely on work commitments, with no revenue share to the Government beyond royalties.

The framework was consolidated under the Oilfields (Regulation and Development) Amendment Act, 2025, which took effect in April, delinking petroleum operations from mining law and introducing a single petroleum lease, graded royalties and legal stability provisions — underpinning the 50 new exploration blocks the Government put up for bidding across OALP, small-field and coal-bed-methane rounds in December 2025.