Samudra Manthan: Govt to bear losses on dry oil wells, recover aid on viable finds, Pg17

Key Highlights:

• The Indian government has launched the Samudra Manthan scheme to incentivize deep-sea oil and gas exploration.
• The scheme, with an outlay of ₹84,084 crore, aims to reduce India's significant dependence on hydrocarbon imports.
• It offers to fund up to 50% of the actual drilling cost for exploratory wells, with a cap of ₹675 crore per well.
• The government will absorb the financial loss if no commercially viable oil or gas is found.
• Companies making profitable discoveries are required to repay the government's contribution through annual installments.

Detailed Insights:

• The Samudra Manthan scheme is a Central Sector Scheme under the Ministry of Petroleum and Natural Gas, operational until FY2030-31.
• It addresses the high financial risks and substantial costs associated with deepwater and ultra-deepwater exploration.
• India's crude oil import dependence is approximately 89%, making increased indigenous production a strategic priority.
• The scheme will support the drilling of 60 deepwater wells, comprising 56 exploratory wells and four stratigraphic wells.
• Stratigraphic wells, drilled to study underground rock formations, can receive up to 100% funding, capped at ₹1,350 crore per well.
• Eligibility for the scheme is restricted to state-run firms or consortia led by them.
• Petroleum Secretary Neeraj Mittal described the scheme as a "structural break" and the "most ambitious upstream oil and gas intervention" in recent times.
• The initiative is projected to add over 600 million tonnes of oil equivalent to India's hydrocarbon reserves.
• Government funding is disbursed in two stages: 40% when drilling reaches 40% of the sanctioned depth and the remaining 60% after well completion.
• The scheme specifically covers blocks awarded under the Revenue Sharing Contract regime.

Key Concepts Involved:

• Deepwater Exploration: Drilling for oil and gas in marine areas with water depths exceeding 400 meters.
• Ultra-deepwater Exploration: Drilling for oil and gas in marine areas with water depths exceeding 1,500 meters.
• Central Sector Scheme: A government scheme fully funded by the Central Government and implemented by its agencies.
• Revenue Sharing Contract (RSC): A contractual framework in the hydrocarbon sector where the government shares a percentage of the revenue from production.