Govt awarded 172 oil & gas blocks in 10 years, but negligible output brings policy and execution into focus

A decade after India promised to unlock its oil and gas potential through a bold new policy, there has been negligible additional production despite large investments committed by companies and a flurry of exploration activity. This raises serious questions on both policy and execution, according to experts.

Since the Hydrocarbon Exploration and Licensing Policy (HELP) was introduced in 2016, the government has awarded 172 oil and gas exploration blocks across 19 sedimentary basins covering a massive 378,652 square kilometres under nine rounds of the Open Acreage Licensing Programme (OALP).

The Directorate General of Hydrocarbons (DGH), the government's technical arm that oversees exploration, admits in its latest annual report that while these 172 blocks attracted cumulative investment commitments of more than $4.36 billion, only 14 discoveries have been made so far and just one of them has been put into production in the marginal field of Gujarat, part of the Cambay basin. Production from this field is understood to be very small, with no meaningful contribution to national output.


Read more: Govt plans to stick to budgeted capex, exit non-strategic areas

For a policy that was meant to boost domestic output and reduce India's dependence on imports, one producing field in nearly ten years throws the efficacy of the policy into serious doubt, said experts.

Queries sent to the director general of DGH did not elicit any response until press time.

DOUBTFUL PROSPECTS

The gap becomes even starker when placed against India's untapped potential. The country holds an estimated 22 billion barrels of undiscovered hydrocarbon resources, yet nearly 70% of these reserves remain unexplored, according to S&P Global Commodity Insights.

"The problem was never just policy design, it was over-selling geological potential with limited data. Bidding happened on optimism, not on proven prospects," a former DGH official told ET on condition of anonymity.

Despite decades of policy changes, from the New Exploration Licensing Policy (NELP) of 1997-98, the country has not seen a major discovery comparable to Bombay High since 1974.

The DGH report highlights that 141 exploratory wells were drilled in a single year and seismic surveys have expanded across basins. But even as 48 exploratory wells were drilled in OALP blocks in 2024-25, none translated into meaningful production.

GEOLOGICAL DIFFICULTIES

A major reason was the location of these blocks, most of which lie in deepwater and ultra-deepwater regions, where exploration is expensive, technically complex and highly risky. Even in the latest OALP round, more than 70% of the area offered falls in deepwater zones. These are not easy fields that can be quickly brought into production. They require years of investment, advanced technology and stable policy support, something investors say India has struggled to provide.

"Geological complexities, such as harsher terrains including deep-sea exploration, significantly elevate the failure risk for operators," the report said, highlighting why companies often prefer squeezing more oil from ageing fields rather than betting on uncertain new discoveries.

NEW ROUND HAS FEW TAKERS

Even as earlier rounds struggle to deliver production, the government is pushing ahead with fresh auctions. The government has now opened the OALP Round XI, offering 21 oil and gas exploration blocks spread across nearly 80,000 square km across on-land, shallow-water, deepwater and ultra-deepwater areas, as it continues its push to expand exploration and reduce import dependence.

The list of companies that have won these blocks is dominated by state-run firms such as ONGC and Oil India, along with a handful of domestic private players like Vedanta. ONGC alone accounts for nearly 71% of India's oil and 84% of gas production, reflecting the overwhelming dominance of public sector undertakings (PSUs) in the upstream sector. Even in recent rounds, ONGC alone won the largest share of blocks, often in consortiums. Reliance Industries, once a major upstream player, has largely stayed on the sidelines, participating only in a single consortium bid.

UNWILLING TO SHOULDER RISKS

Global oil firms British Petroleum, Shell, ENI, ExxonMobil, Petrobras and TotalEnergies have been working with PSUs in brownfield redevelopment projects and have largely stayed away from greenfield exploration in India. The lack of global capital and technology has slowed progress.

"No foreign player has ventured into a greenfield oil and gas project since the new policy came in 2017," the report said, underscoring the limited success of reforms in attracting global capital.

The reason is the policy design. HELP replaced the earlier production-sharing model with a revenue-sharing system, shifting more risk onto companies. Industry veterans argue that this makes projects less attractive, especially in high-risk exploration areas.

DK Sarraf, former chairman and managing director of ONGC, said "overseas companies feel it is not the best option", referring to the revenue-sharing model that replaced cost recovery. Add to this "years of regulatory delays, complex approvals and past disputes like retrospective taxation, and the result is a trust deficit that continues to haunt the sector", he added.

Global disruptions from the Iran war to supply chain shocks have exposed the risks of this dependence, even as the domestic exploration engine, which was supposed to be revived by HELP and OALP, has failed to deliver.

Vivek Jain, analyst at India Ratings said that "you require a fairly large amount of capital and if things don't work out, your balance sheet should be capable enough to handle the losses", a risk few private players are willing to take.