India opens deepwater oil, gas bids, offers to fund up to 50% of well costs | Economy & Policy News

The government is rolling out a special licensing round for deepwater and ultra-deepwater oil and gas blocks, offering monthly bidding windows and relaxed fiscal terms as it prepares to shoulder up to 50 per cent of eligible exploratory well costs under its Rs 84,084-crore Samudra Manthan offshore exploration programme.

The special round under the Open Acreage Licensing Policy (OALP) is aimed at accelerating exploration in India’s offshore frontier basins by lowering entry barriers, sharing the high costs and risks of deepwater drilling, and making acreage available to investors throughout the year.

“Under the government’s ‘Samudra Manthan’ National Offshore Exploration Scheme, a Special OALP is being introduced for fast-track award of deepwater and ultra-deepwater (DW/UDW) exploration blocks,” the Directorate General of Hydrocarbons (DGH) said in a notice.

 

DGH said details of the bid round will be announced shortly.

The Special OALP is a key licensing and investment facilitation initiative aligned with Samudra Manthan, the Centre’s broader mission to unlock India’s offshore hydrocarbon potential, encourage private investment and strengthen domestic energy security. This is with a view to raise domestic production of oil and natural gas to help cut the mounting import bill.

The new framework seeks to make deepwater acreage available to investors on a continuous basis while improving the commercial and operational conditions for undertaking high-risk, capital-intensive offshore exploration.

Approved by the Union Cabinet on July 31, 2026, the Samudra Manthan scheme envisages an integrated push across the offshore exploration and production value chain, covering large-scale seismic data acquisition and processing, deepwater and ultra-deepwater exploratory drilling, scientific drilling in frontier basins, common offshore production and evacuation infrastructure, and the development of an integrated Oil and Gas Manufacturing and Services Zone.

A central component is the allocation of Rs 43,200 crore towards accelerated offshore exploration, including the drilling of 60 deepwater exploration wells. The government has proposed financial support of up to 50 per cent of eligible drilling costs, subject to a ceiling of Rs 675 crore per well, whichever is lower.

The scheme also provides Rs 28,534 crore for offshore seismic data acquisition, processing and interpretation, Rs 10,000 crore for common offshore infrastructure and Rs 2,000 crore for oil and gas manufacturing and services zones.

The government expects the programme to catalyse the addition of more than 600 million tonne of oil equivalent (MMTOE) to India’s hydrocarbon reserves and substantially increase domestic oil and gas production. The broader objective is to reduce import dependence while developing domestic technological and manufacturing capabilities in the offshore energy sector.

Against this broader policy and investment backdrop, the special OALP introduces a continuous bidding mechanism specifically for deepwater and ultra-deepwater blocks.

Under the framework, a 21-day Expression of Interest (EoI) window will open on the first day of every month, creating 12 bidding opportunities annually, the DGH said adding each window will have its own evaluation, bidding and award process running concurrently with other windows, eliminating the need for prospective bidders to wait for a single annual licensing round.

The government has also moved away from revenue-share quotations as a bidding criterion for these blocks. Instead, bids will be evaluated on the basis of the Committed Work Programme, with 10 marks allocated to the originator of the block and another 10 marks for demonstrated deepwater or ultra-deepwater drilling experience.

The revised framework also provides differentiated revenue-sharing terms for Category-I deepwater and ultra-deepwater blocks. During the first five years of production, revenue sharing will apply only upon accrual of windfall gain. From the sixth year onwards, the applicable share will be the higher of 5 per cent of revenue or the relevant windfall gain slab.

The special OALP also seeks to reduce financial and procedural hurdles for companies participating in offshore exploration, DGH said.

The requirement for a parent company’s financial and performance guarantee will be dispensed with where the bidder independently meets the prescribed standalone net-worth requirement.

In consortium arrangements, where the operator is Oil and Natural Gas Corporation (ONGC) or Oil India Ltd (OIL) and demonstrates 100 per cent of the required net worth, the net worth of its partner will not be evaluated separately, the upstream regulator said. This relaxation is subject to the partner being an international oil company or foreign national oil company engaged in exploration and production, or its subsidiary, with a net worth of at least USD 10 billion.

The framework also provides assignment flexibility. Prior government consent will not be required where an international oil company or foreign national oil company, or its E&P subsidiary, with a net worth of at least USD 10 billion, assigns its interest to an Indian national oil company that is already a signatory to the contract.

To facilitate participation across multiple bidding windows, companies will have the option of furnishing a single revolving bid bond of USD 2 million, valid across all special OALP bids, instead of providing a separate guarantee for each bid.

Alternatively, a bid bond can be furnished with each individual bid. The guarantee must be submitted through an electronic bank guarantee or an Insurance Surety Bond regulated by the Insurance Regulatory and Development Authority of India (IRDAI).