The Samudra Manthan scheme is no longer limited to future offshore exploration awards. Under guidelines issued by the oil ministry, financial support for deepwater drilling will also extend to blocks already awarded under the Open Acreage Licensing Policy (OALP) and Discovered Small Field (DSF) frameworks. That change expands the scheme from a forward-looking exploration incentive into a mechanism for reshaping the economics of India’s existing offshore acreage.
Approved by the Cabinet in July with an outlay of Rs 84,084 crore, the Samudra Manthan scheme, formally the National Offshore Exploration Scheme, combines three forms of state intervention: improved geological mapping through seismic surveys, direct support for exploratory wells in deep water, and common infrastructure for evacuating offshore oil and gas. Together, these measures address two of the most difficult barriers in offshore exploration: uncertainty about what lies beneath the seabed and the high cost of moving any discovery into production.
The extension to existing blocks is important because deepwater exploration requires large investments before commercial returns are known. The guidelines cover acreage already awarded under OALP and DSF, acreage included in current bidding rounds and acreage that will be awarded in future rounds. They do not extend support to deepwater fields awarded under the New Exploration Licensing Policy, pre-NELP or nomination regimes.
This distinction creates a defined boundary around the scheme. Eligibility is linked not simply to whether a block is offshore, but also to the policy framework under which it was awarded. OALP and DSF blocks are included, while acreage associated with earlier regimes is excluded. The result is a targeted funding structure rather than a universal subsidy for all deepwater exploration activity.
The scheme’s design places seismic surveys before drilling in the exploration chain. Seismic work is intended to improve resource mapping and provide a stronger geological basis for selecting drilling locations. The guidelines do not state that surveys will eliminate exploration risk. They establish them as a supported part of the process through which operators and the government seek to improve knowledge of offshore resources before committing to wells.
For exploratory drilling, the scale of support varies by well type. The scheme will support 60 wells, including four stratigraphic wells. The government will cover the entire cost of stratigraphic wells, subject to a cap of Rs 1,350 crore per well. Other deepwater wells will receive support for 50% of their costs, with assistance capped at Rs 675 crore per well.
These caps make the government’s exposure measurable. The state is not committing to absorb every cost incurred by operators. Instead, it is offering a defined level of support for a specified number of wells and placing an upper limit on assistance for each well. That structure also separates the treatment of stratigraphic wells, which are fully supported within a cap, from other deepwater wells, which receive partial funding.
The recovery mechanism shows how the scheme attempts to distinguish unsuccessful exploration from commercially viable production. If drilling does not result in a successful commercial discovery, the support will not be recovered. If exploration leads to commercial production, recovery will begin after seven years of commercial production or once the operator has recovered 50% of its exploration and development cost, whichever occurs earlier.
The government will recover the funding from operator revenue through annual instalments. The guidelines specify that recovery will take place without inflation indexation or a time-value adjustment. In practical terms, the state is accepting that the support may be returned later without increasing the nominal amount to account for the passage of time. This makes the arrangement less like a conventional loan priced for capital costs and more like a contingent public contribution linked to commercial success.
The timing of recovery also matters. Operators will not be required to repay assistance immediately after a discovery. The scheme recognises that a discovery must first move into production and generate revenue. At the same time, recovery is not postponed indefinitely: the earlier of the two specified milestones triggers the process. The guidelines therefore tie repayment to both production duration and the operator’s recovery of its own exploration and development expenditure.
The scheme also addresses a problem that lies beyond the drilling of individual wells. Offshore discoveries may be located across separate blocks, and production requires systems to aggregate, process, store, measure and evacuate hydrocarbons. To address this, the government will provide viability gap funding for common infrastructure that can serve multiple discoveries across blocks.
Initially, support is envisaged for common hub infrastructure in the Mahanadi basin, with token funding for Kutch. A separate special purpose vehicle, joint venture or other dedicated entity will own and build the infrastructure. Operators holding blocks in the basin may participate in that entity. The facilities may include systems for aggregating production, evacuating it from offshore areas, processing and storing hydrocarbons, delivering them and measuring volumes.
The common-hub approach changes the infrastructure question from a block-by-block responsibility into a shared development model. Without such infrastructure, each operator may have to develop separate evacuation and processing arrangements, potentially increasing costs or delaying production. The guidelines provide for a structure in which several discoveries can use common facilities, although the supplied material does not establish how operators will divide construction costs, operating expenses or capacity among themselves.
The Mahanadi basin’s inclusion as the initial focus for common hub infrastructure gives the scheme a geographical starting point. The reference to token funding for Kutch indicates that the government’s infrastructure support will not be uniform across all offshore regions at the outset. The guidelines establish differentiated support, but the supplied material does not provide the amount of token funding or a detailed implementation schedule for either location.
Institutionally, the scheme places the oil ministry at the centre of the funding framework while leaving infrastructure ownership and construction to a dedicated entity. This divides responsibilities between public policy and project execution. The government defines eligibility, support levels and recovery conditions; operators and a basin-level vehicle are expected to build or participate in the infrastructure needed to bring production ashore.
That division reflects the different risks involved. Exploration risk concerns whether a commercially viable resource exists. Infrastructure risk concerns whether multiple discoveries can be connected to facilities capable of handling production. The Samudra Manthan framework responds to both, but through different instruments: direct or capped support for wells, and viability gap funding for shared infrastructure.
The numerical structure of the scheme is therefore as important as its headline allocation. The Rs 84,084 crore envelope sits alongside support for 60 wells, four of them stratigraphic, a cap of Rs 1,350 crore per stratigraphic well and a cap of Rs 675 crore for other deepwater wells. These figures show an effort to convert a broad exploration objective into a programme with defined physical outputs and per-project limits.
At the same time, the guidelines leave several implementation questions open in the material available for this analysis. The article does not specify the total amount reserved for seismic surveys, the precise process for approving individual wells, the conditions attached to common-hub funding or the timeline for disbursing support. It also does not state how the government will assess commercial production for recovery purposes beyond the milestones described in the guidelines.
The central urban and infrastructure issue is that energy security is not created by exploration alone. It depends on the systems that connect offshore resources to processing, storage, measurement and delivery networks. By including common infrastructure in the scheme, the government has acknowledged that the commercial value of an offshore discovery depends partly on whether shared facilities can be created across blocks and basins.
The scheme also illustrates how public funding can be structured around uncertainty. Unsuccessful wells receive support without recovery, while successful commercial production triggers repayment under defined conditions. Existing OALP and DSF blocks are brought into this arrangement, but older NELP, pre-NELP and nomination-regime deepwater fields remain outside it. The policy is consequently broad in coverage but selective in eligibility.
What the guidelines confirm is a coordinated attempt to reduce the upfront cost of deepwater exploration and improve the infrastructure required to evacuate offshore production. What remains to be established is how quickly the supported wells will be approved, how common hubs will be financed and built, and how operators will participate in the dedicated entities responsible for those facilities. Those implementation milestones will determine whether the scheme becomes only a funding framework or a functioning offshore production network.
