What is the Samudra Manthan scheme all about? | Explained
The Samudra Manthan scheme aims at boosting India’s deepwater hydrocarbon exploration and energy security with an ₹84,084 crore investment
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Context
The Union Cabinet has approved the scheme, a ₹84,084 crore initiative under the to boost deepwater and ultra-deepwater hydrocarbon exploration in India. The scheme aims to de-risk high-cost offshore exploration, attract private investment, and enhance India's energy security by reducing dependence on aging oil fields and costly crude imports.
UPSC Perspectives
Economic
The scheme is fundamentally a risk-sharing mechanism designed to correct a market failure in the highly capital-intensive offshore exploration sector. Hydrocarbon exploration, particularly in deepwater and ultra-deepwater zones, involves a long gestation period (5-10 years) and high costs (e.g., $125-$150 million per well). By funding up to 50% of eligible drilling costs, the government is lowering the entry barrier for private players and mitigating the inherent geological risks. This aligns with the broader objective of enhancing energy security and reducing the current import dependence, which is critical given India imports roughly 85% of its crude oil requirements. A significant increase in domestic production, projected from 62 MMTOE to 80 MMTOE, could save nearly ₹1 lakh crore annually in foreign exchange, positively impacting the current account deficit.
Governance
The scheme's structured approach—allocating funds across seismic data acquisition (₹28,534 crore), drilling (₹43,200 crore), infrastructure hubs (₹10,000 crore), and manufacturing zones (₹2,000 crore)—demonstrates a comprehensive strategy. The focus on establishing oil and gas manufacturing zones is particularly noteworthy as it promotes localization and domestic manufacturing, aligning with the initiative. The scheme builds upon existing policies like the (OALP), which allows investors to carve out blocks of their choice and submit expressions of interest. The success of will depend heavily on the efficient execution of the OALP rounds and the ability to attract global majors with the requisite technology and capital, moving beyond reliance primarily on state-owned entities like and .
Geographical
The scheme targets specific frontier basins known for potential, yet challenging, hydrocarbon reserves: the Krishna-Godavari (KG), Cauvery, Mahanadi, and Andaman regions. These areas present significant geological complexities associated with deepwater (water depths > 400 meters) and ultra-deepwater (water depths > 1500 meters) environments, requiring advanced technological interventions. The focus on these offshore basins is crucial due to the natural production decline (6-7% annually) in mature onshore and shallow-water fields like Mumbai High. The Andaman frontier, where has already reported gas discoveries, represents a relatively unexplored region with high potential, crucial for expanding India's hydrocarbon resource base from the current 1.6 billion tonnes to the targeted 2.2 billion tonnes.