Samudra Manthan: Govt to boost offshore exploration for oil & gas with $8.8 billion push
The Union government approved the Samudra Manthan National Offshore Exploration Scheme, with a total outlay of ₹84,084 crore (approximately $8.8 billion), to expand offshore oil and gas exploration and production.
The scheme will be led by India's state-run exploration and production majors — Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL) — which hold the majority of India's existing offshore acreage and operating expertise.
It funds deepwater exploratory drilling, seismic data acquisition, common infrastructure hubs, and manufacturing/services zones, running through FY 2030-31.
The scheme is intended to reduce exploration risk for companies operating in high-cost offshore blocks and thereby increase the pace of new discoveries and production.
ONGC and Oil India Limited: India's Upstream National Oil Companies (NOCs)
ONGC, incorporated in 1956 and now a Maharatna Central Public Sector Enterprise under the Ministry of Petroleum & Natural Gas, is India's largest crude oil and natural gas producer, responsible for a majority of domestic output, including offshore fields like Mumbai High. Oil India Limited, a Navratna CPSE, is the second-largest national upstream oil and gas company, with exploration and production operations concentrated mainly in the Northeast and increasingly in offshore and overseas blocks.
Key Details
- ONGC operates through both onland and offshore assets and also holds equity in downstream and city gas distribution ventures via subsidiaries such as ONGC Videsh (overseas exploration) and MRPL (refining).
- Government classifies CPSEs into Maharatna, Navratna, and Miniratna categories based on financial performance and operational autonomy criteria; Maharatna status grants the highest investment and decision-making autonomy.
- Both companies operate under the Hydrocarbon Exploration and Licensing Policy (HELP), 2016, and Open Acreage Licensing Policy (OALP) framework for acquiring new exploration blocks.
As the scheme is implemented, ONGC and OIL — as the entities with existing offshore infrastructure, technical capability, and majority acreage — are expected to be the primary executing agencies for the deepwater drilling and seismic components funded under Samudra Manthan.
Viability Gap Funding as a Risk-Sharing Instrument
Viability Gap Funding (VGF) is a government support mechanism used to make commercially unviable but socially/economically desirable infrastructure projects attractive to private investment, typically by funding a portion of capital cost so that the project's revenue can cover the remaining investment at an acceptable return. While Samudra Manthan's cost-sharing on deepwater wells is not formally termed VGF, it follows the same underlying economic logic — the government absorbs part of the upfront exploration risk to unlock investment that would not otherwise occur.
Key Details
- Classical VGF schemes (under the Finance Ministry's VGF Scheme, revised 2020) typically cap government support at 40% of project cost for infrastructure projects such as roads, ports, and social infrastructure.
- Samudra Manthan's drilling support (up to 50% of eligible cost or ₹675 crore per well, whichever is lower) is a sector-specific variant of this risk-sharing principle, tailored to the high failure rate of deepwater exploration wells.
- Similar risk-mitigation instruments exist internationally in offshore exploration, where governments co-fund exploratory (as opposed to appraisal or development) wells because dry-well risk is highest at this stage.
The scheme's core innovation is treating deepwater exploration cost-sharing as an infrastructure-style de-risking tool, rather than leaving state-run companies to bear the full capital risk of new offshore basins alone.
India's Petroleum Sector Governance Structure
The Ministry of Petroleum & Natural Gas oversees upstream (exploration and production), midstream (transport, storage), and downstream (refining, marketing) segments of the hydrocarbon sector, with the Directorate General of Hydrocarbons (DGH) as technical regulator for exploration and production activities and the Petroleum and Natural Gas Regulatory Board (PNGRB) regulating downstream infrastructure and access.
Key Details
- DGH administers licensing rounds (OALP, DSF) and maintains geoscientific data through the National Data Repository (NDR).
- PNGRB, a statutory regulator established under the PNGRB Act, 2006, regulates refining, pipeline, and city gas distribution infrastructure but does not regulate upstream exploration.
- Central Sector Schemes like Samudra Manthan are fully funded by the Union government (as opposed to Centrally Sponsored Schemes, which require state co-funding), reflecting that petroleum exploration falls under the Union List.
Samudra Manthan is administered as a Central Sector Scheme of the petroleum ministry, consistent with the constitutional and administrative framework in which upstream hydrocarbon exploration is a Union subject implemented through central PSUs like ONGC and OIL.
- Samudra Manthan total outlay: ₹84,084 crore (approximately $8.8 billion), Central Sector Scheme of the Ministry of Petroleum & Natural Gas, running through FY 2030-31.
- Lead implementing agencies: ONGC (Maharatna CPSE) and Oil India Limited (Navratna CPSE) — India's two largest state-run upstream oil and gas companies.
- Deepwater drilling component: 60 wells, ₹43,200 crore outlay, government funding of up to 50% of eligible cost or ₹675 crore per well, whichever is lower.
- Reserve accretion target: over 600 MMTOE; production target: rise from ~62 MMTOE to 80 MMTOE annually.
- Regulatory framework: exploration licensing under HELP (2016)/OALP (2017), administered by the DGH; downstream infrastructure regulated separately by PNGRB.