With an aim to increase domestic reserves of oil and gas in the country and reduce dependence on imports, the central government will provide financial assistance up to 50 per cent of the cost of drilling wells for deep sea oil and gas exploration. If the search is successful, the concerned companies will have to return the amount received by the revenue from the government. At the same time, if the exploration does not find oil or gas, the government will bear the loss. Govt Rs. This arrangement has been made in the operational guidelines issued under the 84,084 crore Samudra Manthan scheme. It aims to reduce the initial financial risk associated with deep-sea oil and gas exploration and encourage new exploration.

The amount has to be returned in installments

As per the guidelines, the recovery of the assistance amount will start after seven years of commencement of commercial production or recovery of 50 per cent of the company’s research and development expenditure. The recovery process will be initiated depending on which of the two situations occurs first. The amount has to be repaid in annual installments and there will be no further increase in line with inflation. Under the scheme, a total of 60 wells will be supported to be drilled in deep sea areas with a depth of more than 400 meters and in ultra-deep sea areas with a depth of more than 1,500 meters. Out of these, 56 exploratory wells will be given a grant of up to 50 percent of the actual cost. Maximum limit of assistance for each well is Rs. 675 crore has been fixed. At the same time, up to 100 percent of the cost will be supported for four stratigraphic wells to study rock layers and geological structures. For each such well a maximum of Rs. A limit of 1,350 crores has been fixed.

How much will the government help?

Only government companies or coalitions led by them can apply for this assistance. Payment will be made based on progress of excavation. 40 percent amount will be paid after completion of 40 percent of approved depth and remaining 60 percent amount will be paid on completion of well excavation and approval of report. Based on the prescribed limit, the government assistance for well digging only is Rs. 43,200 crores. However, the guidelines do not give detailed details of the total budget of the scheme under various heads.

These blocks will benefit

The scheme will benefit only those blocks or areas which have been allotted under the Revenue Share Agreement system under the bidding process which started in 2016. Earlier, blocks allotted under the production sharing contract system and coal-bed methane projects would remain outside its scope, unless the government issues a notification to this effect. Further, the aid will only apply to wells drilled for discovery of new resources. Subsidy will not be available on the cost of development wells and sidetrack wells constructed to start production from oil or gas reserves already discovered. The scheme will be applicable till the financial year 2030-31. FY 2026-27 is earmarked as the preparatory year, while the first phase will run from FY 2027-28 to 2030-31.

PM made the announcement on August 15

Prime Minister Narendra Modi announced the scheme in his Independence Day address on August 15, 2025. He emphasized the need to work in mission mode to find oil and gas reserves under the sea. Petroleum Secretary Neeraj Mittal, introducing the guidelines, described it as the most ambitious government initiative in the oil and gas sector in recent years. According to him, the scheme is likely to add more than 600 million tonnes of oil equivalent resources to the country’s reserves. The second part of the Samudra Manthan scheme provides for Viability Gap Funding (VGF) for the development of such oil and gas reserves which are not commercially viable on their own. Under this, assistance will be provided in the construction of facilities such as undersea manifolds, main pipelines, central processing platforms and shared floating production units to connect two or more small or underdeveloped oil-gas fields into a common production system.

Priority to Mahanadi Basin

Mahanadi basin has been prioritized for this assistance initially, while a token amount has been provided for the Kutch basin. The companies concerned may form joint ventures or special units to build and operate such infrastructure. Before construction begins, partner companies must agree on equity, ownership and capacity commitments. Shared facilities will be governed on the principle of fair and non-discriminatory access. If part of the company’s capacity is not used, it has to be made available to other interested companies.

If this happens, the money will stop

Assistance under this item will be disbursed in four equal installments. Each installment will be 25 percent and the payment will be linked to the scheduled progress of construction and commissioning of the project. The amount of assistance will not automatically increase if costs increase or the project is delayed. In case of persistent default in the prescribed targets or misuse of funds, the payment may be stopped and the previously declared amount may also be recovered. Proposals for projects have to go through the Public Investment Board process, after which the relevant minister approves the expenditure. In the third part of the plan, it is proposed to develop manufacturing and service sectors for the oil and gas industry. Facilities like electricity and water, jetties for berthing and loading of ships, warehouses and testing and certification laboratories will be developed in these areas.