Government Eyes ₹80,000 Crore Incentive to Boost Deepwater Oil and Gas Exploration

The Union government is preparing an incentive package of around ₹80,000 crore to support deepwater and ultra-deepwater oil and gas exploration, as per The Economic Times report.  

The proposal, being drawn up by the Ministry of Petroleum and Natural Gas under the National Deepwater Exploration Mission, or Samudra Manthan, is under discussion with other ministries. It will be taken to the Cabinet after the consultation process is completed. 

Government May Fund Part of Exploration 

The proposal includes reimbursement of up to 50% of the cost of drilling deepwater exploratory wells. A spending limit for each well is expected to be fixed to keep costs under control.  

Officials are also examining partial funding for 3D seismic surveys, which are carried out before drilling to study underground formations. The proposed support will be available to both government-owned and private exploration companies. 

High Costs Have Slowed Exploration 

Deepwater exploration requires large investments before any commercial discovery is confirmed. Drilling one exploratory well in deepwater generally costs between ₹1,000 crore and ₹1,200 crore, while ultra-deepwater wells require even higher spending. 

Companies have often decided against drilling after seismic surveys indicated low prospects of finding commercially recoverable reserves. In several cases, exploration blocks have been surrendered instead of moving to the drilling stage. 

Licensing and Data Collection Continue 

The government is currently auctioning 18 deepwater and ultra-deepwater blocks under the Open Acreage Licensing Programme (OALP). The deadline for bids has been extended to 17 September 2026, and the incentive proposal is expected to be finalised before the process concludes.  

ONGC has also started drilling its first deepwater exploratory well under the Samudra Manthan programme. 

Existing Rules to Remain in Place 

The current exploration regime requires companies that receive blocks to complete a minimum work programme, including seismic surveys and exploratory drilling, or face penalties.  

Alongside the proposed incentives, the government has expanded offshore 2D seismic data collection and plans to allow private companies to reprocess older datasets using newer technology to improve the quality of geological information available for exploration. 

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Conclusion 

The proposed package focuses on sharing a part of exploration costs while improving access to geological data. The incentive framework is still under discussion and is expected to be considered by the Cabinet before implementation. 

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