Why in News?

• The Union Cabinet has approved the National Offshore Exploration Scheme (NOES), titled ‘Samudra Manthan’, with an outlay of ₹84,084 crore for implementation until FY 2030-31.
• The scheme seeks to accelerate offshore oil and natural gas exploration, particularly in deepwater and ultra-deepwater basins, reduce import dependence, and enhance India's long-term energy security.

What’s in Today’s Article?

• Need for the NOES
• Key Components of Samudra Manthan
• Major Objectives
• Focus Areas for Exploration and Need for Government Support
• Expected Benefits
• Challenges and Reforms
• Conclusion

Need for the NOES:

• India is the world’s third-largest consumer of crude oil and a major consumer of natural gas. However,
  • Over 88% of crude oil requirements are met through imports.
  • Around 50% of natural gas demand is import-dependent.
  • Domestic production has stagnated, while existing oil and gas fields witness a 6–7% annual natural decline in output.
  • Geopolitical disruptions, such as the West Asia crisis, expose India to supply and price volatility.
• The scheme addresses these challenges by promoting domestic hydrocarbon exploration in offshore regions.

Key Components of Samudra Manthan:

• Deepwater and ultra-deepwater exploratory drilling (₹43,200 crore):
  • Financial support for drilling 60 exploration wells, with a government assistance of up to 50% of eligible drilling cost or ₹675 crore per well, whichever is lower.
  • Intended to reduce investment risks associated with expensive and uncertain offshore exploration.
• Offshore data acquisition (₹28,534 crore):
  • Large-scale acquisition, processing and interpretation of high-quality seismic data.
  • Scientific drilling in frontier basins to reduce geological uncertainty and improve exploration success.
• Common offshore infrastructure (₹10,000 crore): Development of shared offshore production and evacuation infrastructure to facilitate commercial production from discovered hydrocarbon reserves.
• Oil and gas manufacturing and services zones (₹2,000 crore): Establishment of integrated manufacturing and service hubs to promote domestic manufacturing, localisation of critical equipment, and development of indigenous capabilities.

Major Objectives:

• The scheme aims to catalyse over 600 Million Metric Tonnes of Oil Equivalent (MMTOE) in additional reserves.
• Increase domestic hydrocarbon production from around 62 MTOE to nearly 80 MTOE annually, subject to successful exploration.
• Expand India's hydrocarbon resource base from 1,600 MTOE to 2,200 MTOE.
• Reduce annual crude oil imports by nearly ₹1 lakh crore.
• Attract substantial investments across the exploration and production (E&P) value chain.
• Promote technological innovation and employment in the upstream petroleum sector.

Focus Areas for Exploration and Need for Government Support:

• Focus areas:
  • The scheme prioritises exploration in frontier offshore basins, including -
    • Krishna-Godavari Basin
    • Cauvery Basin
    • Mahanadi Basin
    • Andaman Offshore Region
  • These regions are believed to possess significant untapped hydrocarbon potential but require advanced technology and large capital investments.
• Government support:
  • Deepwater exploration is characterised by -
    • Extremely high drilling costs (US$100–250 million per well).
    • Long gestation period of 5–10 years before commercial production.
    • High geological and commercial risks, as discoveries may not occur or may not be economically viable.
  • By adopting a risk-sharing approach, the government seeks to encourage greater participation by public and private upstream companies.

Expected Benefits:

• Energy security: Lower dependence on imported crude oil and natural gas. Greater resilience against global supply disruptions and price shocks.
• Economic benefits:
  • Potential annual savings of nearly ₹1 lakh crore in import expenditure.
  • Increased investment across the hydrocarbon value chain.
  • Employment generation in exploration, engineering, manufacturing and offshore services.
• Industrial development: Development of indigenous manufacturing ecosystem for offshore equipment. Enhanced localisation and reduced reliance on imported technologies.
• Technology and capacity building:
  • Adoption of advanced seismic imaging, digital programme management and offshore drilling technologies.
  • Strengthening India's technical capabilities in deepwater exploration.

Challenges and Reforms:

• Challenges:
  • High geological uncertainty and exploration failure risks.
  • Capital-intensive nature of offshore drilling.
  • Requirement of sophisticated technology and specialised expertise.
  • Environmental concerns related to offshore drilling and marine ecosystems.
  • Commercial viability of discovered reserves remains uncertain.
• Expert views:
  • Extensive seismic surveys and exploratory drilling will reduce geological uncertainty and encourage greater private investment.
  • The scheme could improve exploration in previously underexplored offshore areas and modestly reduce import dependence by 3–5% through incremental production.
• Government reforms supporting the scheme:
  • Samudra Manthan builds upon recent upstream sector reforms, including -
    • Opening nearly the entire offshore acreage for exploration.
    • Modernisation of the legislative and contractual framework.
    • Strengthening of the National Data Repository (NDR).
    • Promotion of advanced technologies and digital programme management.
  • The scheme was first envisioned by the Prime Minister during his last year Independence Day address, calling for a modern "Samudra Manthan" to unlock India's offshore energy potential.

Conclusion:

• The Samudra Manthan scheme represents a strategic shift towards unlocking India's offshore hydrocarbon resources through public investment, risk-sharing, advanced technology and infrastructure development.
• While exploration outcomes remain uncertain, successful implementation can significantly strengthen energy security, reduce import dependence, promote domestic manufacturing under Atmanirbhar Bharat.