Govt to fund 50% of deepwater exploration costs under Rs 84,084 crore Samudra Manthan scheme

New Delhi: The government will extend financial support for deepwater drilling to blocks already awarded under the current exploration policy, not just those awarded in future rounds, according to the oil ministry’s guidelines for the Samudra Manthan scheme.

The ministry has issued guidelines for the Rs 84,084 crore Samudra Manthan or National Offshore Exploration Scheme, approved by the Cabinet in July. The scheme provides for seismic surveys to improve resource mapping, up to 50% financial support for exploratory wells in deep waters, and common infrastructure to evacuate offshore oil and gas.

The scheme covers “acreage already awarded under the Open Acreage Licensing Policy (OALP), Discovered Small Field (DSF) and acreage under current bidding rounds and future rounds,” the guidelines said. This brings previously awarded OALP and DSF blocks within the scheme.


However, deepwater fields awarded under the New Exploration Licensing Policy (NELP), pre-NELP and nomination regimes will not qualify for support. These regimes were in force under previous governments. The OALP and DSF policies were launched during the first term of the Modi government.

The guidelines also specify how the government will recover funding if drilling leads to a commercial discovery. “Recovery of scheme funding shall commence after seven years of commercial production or recovery of 50% of operator’s exploration and development cost whichever is earlier, without inflation indexation or time-value adjustment,” the ministry said.

The government will recover the funding from operator revenue in annual instalments. Support for unsuccessful wells will not be recovered.

The scheme will support 60 wells, including four stratigraphic wells. It will cover the entire cost of stratigraphic wells, subject to a cap of Rs 1,350 crore per well. Other deepwater wells will receive support for 50% of their costs, capped at Rs 675 crore per well.

The scheme will also provide viability gap funding (VGF) for common infrastructure to aggregate production from multiple discoveries across blocks. Initially, support is envisaged for common hub infrastructure in the Mahanadi basin, with token funding for Kutch.

A separate special purpose vehicle (SPV), joint venture or other dedicated entity will own and build the infrastructure. It may include operators holding blocks in the basin. The facilities can be used to aggregate, evacuate, process, store, deliver and measure hydrocarbons.