India’s oil ministry has issued guidelines for Samudra Manthan, its INR841bn ($8.9bn) offshore exploration scheme. Under the rules, the government will pay up to 50% of the cost of exploratory deepwater wells, The Economic Times reported. The Cabinet approved the scheme in July.
Who qualifies for Samudra Manthan support
Importantly, support now covers blocks already awarded under the Open Acreage Licensing Policy and the Discovered Small Field rounds. Future rounds also qualify. However, the scheme leaves out fields from the older NELP, pre-NELP and nomination regimes.
In total, the scheme will back 60 wells. Four of them are stratigraphic wells, which the state will fund in full up to INR13.5bn ($142mn) each. For the other 56 deepwater wells, support stops at INR6.75bn ($71mn) a well.
How the state gets its money back
If a well finds oil or gas, recovery starts after seven years of commercial production or once the operator recovers 50% of its costs, whichever is earlier. On the other hand, the state will not recover support for dry wells. The scheme also funds seismic surveys and shared offshore infrastructure, starting with a hub in the Mahanadi basin.
For explorers such as ONGC, this lowers the risk of costly deepwater bets. See our report on ONGC’s new chairman.
