Govt plans to start recovery 7 years after deepwater explorers begin production

New Delhi: The government plans to start recovering its financial support for deepwater exploration seven years after explorers begin production or only after they recoup half of the development cost, under the Samudra Manthan mission, said people familiar with the matter.

The Cabinet recently approved a ₹84,000-crore scheme to support deepwater exploration through 2030-31, with about ₹43,000 crore earmarked for drilling 60 deepwater and ultra-deepwater wells. The scheme provides financial support of up to 50% of drilling costs, or ₹675 crore per well, whichever is lower.

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If the scheme-supported drilling results in a commercially viable discovery, the government plans to recover its investment only after the explorer has made substantial recovery of its own funding. The oil ministry has proposed recovering the government's investment after seven years of a field starting production or only after the explorer recovers half of the development cost, the people said.

The ministry recently held consultations with industry on operationalising the scheme and shared its plans for investment recovery. Some industry members are learnt to have suggested that the recovery be made after five years of starting production. They didn't favour linking recovery to the point at which half of the development costs have been recovered, as this could become contentious later, the people said.

Some industry executives said the ₹10,000 crore allocation for shared production and evacuation facilities in some basins may also support bringing smaller discoveries into production.

Under the scheme, ₹28,500 crore has been earmarked for offshore data acquisition, including ₹12,500 crore for 3D seismic data. The Centre will likely appoint its own agencies for these data acquisitions, and the collected data will form part of the National Data Repository (NDR), which can then be accessed by all explorers.

Through the scheme, the government is seeking to intervene at key points across the value chain-from data acquisition and drilling support to the creation of common infrastructure. The broader aim is to reduce risks that have discouraged explorers from venturing into deepwater opportunities and attract global oil majors in India's upstream industry and reverse years of falling oil and gas output.