Cabinet approves Rs 84,084-crore Samudra Manthan scheme for offshore oil, gas exploration

The Union Cabinet has approved the National Offshore Exploration Scheme, named 'Samudra Manthan', with a financial outlay of Rs 84,084 crore. The scheme aims to enhance oil and gas exploration and production from India's offshore basins, thereby reducing the country's reliance on imported energy.

The approval, announced on Friday, covers implementation until the financial year 2030-31. The scheme provides financial support for exploratory drilling in deep-sea and ultra-deep-sea areas, development of common infrastructure for producing discovered hydrocarbons, funding for offshore data acquisition, and creation of hydrocarbon manufacturing and services zones.

According to the government, the initiative is expected to catalyse reserve accretion of over 600 million tonnes of oil and oil equivalent gas. It is also anticipated to stimulate significant investments across the oil and gas exploration and production value chain.

India is the world's third-largest consumer of crude oil and a major consumer of natural gas. However, the country depends on imports for over 88% of its oil requirements and about 50% of its natural gas needs. This high level of import dependency exposes the economy to global energy market volatility and supply risks, as seen during the ongoing West Asia crisis. Domestic production has remained stagnant while energy demand continues to rise.

India's offshore basins have historically contributed significantly to domestic crude and natural gas output. However, many deep-water blocks remain unexplored due to high costs and technical challenges. The Samudra Manthan scheme is designed to address these hurdles by providing targeted financial support and shared infrastructure.

The government said the scheme encompasses comprehensive interventions across the offshore exploration value chain. It includes large-scale acquisition, processing and interpretation of high-quality seismic data; accelerated deepwater and ultra-deepwater exploratory drilling; scientific drilling in frontier basins; development of common offshore production and evacuation infrastructure; and establishment of an integrated Oil & Gas Manufacturing and Services Zone.

The scheme also provides for digital programme management, capacity building, technology adoption, stakeholder engagement and international outreach, creating an integrated ecosystem to accelerate offshore exploration and production, the government added.

Prime Minister Narendra Modi had first indicated the initiative in his Independence Day address last year, calling for a modern-day 'Samudra Manthan' to unlock India's vast offshore energy potential.

Of the total outlay, Rs 43,200 crore is allocated to support deep-sea exploratory drilling, which involves significant costs and risks. Rs 28,534 crore is earmarked for offshore data acquisition, and Rs 10,000 crore will partially fund common infrastructure to bring discovered oil and gas reserves into production. A further Rs 2,000 crore is set aside for developing oil and gas manufacturing and services zones.

Under the scheme, support of up to Rs 650 crore will be provided for every well drilled in deep-sea and ultra-deep-sea areas. Drilling at such depths is expensive, with costs estimated between $100 million and $250 million per well. It is also risky, as drilling may not lead to any discovery, and even if hydrocarbons are found, they may not be commercially viable. The scheme is expected to mitigate some investment risks for upstream oil and gas players and encourage more investment in the sector.

The government stated that over the past decade, it has implemented transformative reforms in the upstream sector, including opening almost the entire offshore acreage for exploration, modernising the legislative and contractual framework, and strengthening the National Data Repository. With Samudra Manthan, the government aims to usher in a new era of accelerated offshore exploration through strategic public investment, cutting-edge technologies and world-class infrastructure.