India’s Deep-Sea Initiative: Understanding the Centre’s ‘Samudra Manthan’ Project for Crude Oil Extraction
Months of turmoil in the Middle East have disrupted global energy supplies, prompting countries to reassess their energy security strategies. In response, India is shifting its focus inward, aiming to boost domestic oil and gas production. The Indian government has approved the Rs 84,084 crore Samudra Manthan National Offshore Exploration Scheme, which will share the financial risks of deepwater exploration with private companies.
The scheme will cover 50% of the costs for drilling deepwater or ultra-deepwater exploration wells, up to a maximum of Rs 650 crore per well. Officials indicated that this initiative will support the drilling of 60 exploration wells over the next five years. This funding approach is unprecedented, as it marks the first time a government is financing exploration risks directly from its budget.
India’s reliance on imported energy has increased significantly, with crude oil imports rising from 77% to 88% of its total requirements over the past decade. The country also imports approximately half of its natural gas, which is essential for various sectors including fertilizer production and power generation. Recent conflicts in the Middle East have underscored the urgency for India to enhance its domestic energy production capabilities.
How the Scheme Will Work
The Samudra Manthan scheme will be available to companies holding blocks from previous Open Acreage Licensing Programme (OALP) rounds, as well as those securing new acreage in ongoing bidding rounds. Eligible companies can claim government support of up to Rs 650 crore for each qualifying exploration well. The scheme is designed to attract global energy firms to India’s offshore basins.
Of the total Rs 84,084 crore allocation, Rs 43,200 crore is earmarked for deepwater and ultra-deepwater drilling, while Rs 28,534 crore will fund offshore seismic and geological surveys. Additionally, Rs 10,000 crore is allocated for common infrastructure, including subsea pipelines and processing facilities. The scheme aims to create shared infrastructure to lower development costs and improve project economics.
What Experts Are Saying
Prashant Vashisht, senior vice president at ICRA Ltd, noted that the scheme addresses critical challenges in offshore exploration. He highlighted the funding for seismic data acquisition in previously restricted areas, which has hindered the commercial exploitation of oil and gas reserves. Vashisht also pointed out that the initiative aims to add incremental annual production of 10-15 million tonnes of oil equivalent, potentially reducing import dependence by 3-5%.
A Long-Term Exploration Push
Officials anticipate that the scheme will stimulate exploration across India’s offshore basins and attract international investment. They acknowledge that deepwater exploration carries inherent risks, and not every well drilled will yield commercial discoveries. The government’s decision to fund exploration risks represents a shift from its previous focus on supporting only proven development projects. This initiative builds on a series of policy reforms aimed at enhancing India’s energy landscape.
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