New Delhi: The Union cabinet last week approved the ambitious ₹84,000 crore Samudra Manthan scheme for offshore deepwater hydrocarbon exploration for a period of five years. The initiative aims to revive India's stagnant exploration and production (E&P) sector and reduce import dependence at a time when the world's third-largest oil consumer imports about 90% of its crude oil needs. Mint unpacks the scheme.
Why is India focusing on offshore exploration now?
India's crude oil production has been largely stagnant over the years. In the last fiscal year (FY26), India produced about 28 million tonnes of oil, down from 28.7 million tonnes in FY25. Similarly, natural gas production declined in FY26 to 34,776 million standard cubic meters (mscm), down from 36,113 mscm in FY25. While India imports 90% of its crude oil requirements, liquefied natural gas imports account for about 50% of the country's overall natural gas consumption.
The additional production has the potential to reduce crude oil imports by nearly ₹1 trillion annually. In FY26, India's petroleum product consumption reached a record 241.6 million tonne.
What is deepwater and ultra-deepwater exploration?
Deep water exploration for hydrocarbons is the process of locating and drilling hydrocarbon reservoirs in ocean depths generally exceeding 200 meters, often extending into ultra-deep waters beyond 1,500 meters. The petroleum ministry has said India's future hydrocarbon potential lies largely in deepwater and ultra-deepwater basins such as Krishna-Godavari, Cauvery, Mahanadi and the Andaman region.
Exploration in these frontier areas requires advanced technology and significant investment, with a single deepwater exploratory well costing about $125 million–$150 million. Oil and gas fields experience a natural production decline of around 6–7% annually, making the scheme and its financial support all the more important.
What is the objective of the scheme?
The offshore exploration scheme aims to increase India's domestic oil and gas production from around 62 million metric tonnes of oil equivalent to 80 MMTOE annually and expand the country's hydrocarbon resource base from 1.6 billion tonnes of oil equivalent (TOE) to 2.2 billion TOE.
The focus on expanding exploration and production in the country gains significance now, given the global uncertainty over oil supplies due to the war in West Asia and the closure of Strait of Hormuz.
What does the scheme offer?
The Centre will provide financial support of up to 50% of the cost of drilling deepwater exploration wells. It involves acquisition and processing of modern offshore seismic data with an outlay of ₹28,534 crore, drilling of 60 deepwater exploration wells with an allocation of ₹43,200 crore, including government support of up to 50% of the eligible drilling cost or ₹675 crore per well; development of common offshore infrastructure hubs with an outlay of ₹10,000 crore to facilitate commercialisation of discoveries; and establishment of oil and gas manufacturing and services zones with an outlay of ₹2,000 crore to promote domestic manufacturing and localization of critical equipment and services, which is currently dominated by global players.
How will the scheme change India's exploration landscape?
Incentives for offshore seismic data acquisition, especially in erstwhile 'no-go' zones, are expected to boost commercial exploitation of oil and gas reserves in areas that lack good prospectivity data.
Investments in large-scale seismic data acquisition and drilling of exploratory wells in deep and ultra-deep waters may reduce geological uncertainty and de-risk exploration. The emphasis on shared infrastructure for production and evacuation may improve project viability and create value by lowering costs for discoveries. Hydrocarbon exploration is a capital-intensive process and has a long gestation period of 5–10 years. Besides incentivizing domestic E&P players, the government aims to attract foreign investments in this space.