India must bolster its energy security by boosting domestic oil output over the medium term as it faces relentless US pressure to stop buying cheaper Russian oil. Considering our high import dependence of 88% for oil, it is not as if non-Russian options are equally cheap either. The global oil market might be awash with supplies but geopolitical tensions in West Asia with a possible US strike on Iran are keeping prices on the boil rather than crashing.
In this milieu, India must make determined efforts to reverse the downtrend in domestic production since FY12, which has been happening due to obstructive regulations, high taxation, and declining output from old and marginal fields. The country also lacks the technological capability for deep water exploration. To be sure, the ruling dispensation is seized of the imperative of stepping up oil production by incentivising domestic producers and global giants for exploration and production (E&P), and has enacted the Oilfields (Regulation and Development) Amendment Act, 2025. The objective is to increase exploration acreage to 1 million square kilometres (sq km) by 2030.
Obviously, it will take more time before the pragmatic policy stance bears fruition. Although the policy focus has shifted to production maximisation—which should be welcomed—higher domestic output is predicated on new discoveries. Clearly, India needs a big oil moment. But this can happen only with a much greater involvement of the global oil majors. With the new policy regime, foreign drillers will be insured against any fiscal policy changes—a major irritant that kept Exxon, Shell, and Chevron from participating in the first nine drilling rounds.
But they must register their presence in the tenth round. Bids were to have been submitted on February 18 but the deadline has been extended for the fourth time to May 29. While the Directorate General of Hydrocarbons has not specified any reasons for the deferral, it is possible that potential investors are still being deterred by our upstream regulations and tax regime. If so, this will be a serious barrier to our efforts to step up relative self-sufficiency amidst interesting times for deep-sea drilling with Chevron deploying new technologies and equipment that can operate at ultra-high pressures in the Gulf of Mexico to access previously unobtainable resources.
In the tenth round of the Open Acreage Licensing Policy, 25 blocks with a total area of 191,986 sq km have been offered to bidders, which include four blocks with a combined area of 47,058 sq km in the Andamans basin. E&P in this basin promises to be the big oil moment that Union Petroleum Minister Hardeep Singh Puri has been touting with the potential of “several Guyanas”. So far, only Oil India Ltd (OIL) has confirmed the presence of natural gas in a shallow offshore well, Vijayapuram-2, in the Andamans and is collaborating with TotalEnergies for technical support in deep water and ultra-deep water exploration.
The chairman and MD has reportedly stated that OIL will make the best efforts to achieve commercial production should there be any discovery in five years. As underscored by FE, E&P is challenging as the Andamans lie along a complex tectonic arc and is active seismically. The basin also lacks evacuation pipelines, processing facilities, and logistical infrastructure. That said, India needs to go all in to boost E&P by incentivising global majors to participate in a highly serendipitous process.