MC EXPLAINER Why Oil Minister Puri believes Andaman oil finds could be India’s 'Guyana-sized' discovery?

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With India’s appetite for crude oil on the rise, the country’s upstream companies are aggressively carrying out exploration activities in their respective blocks, including the Andaman Sea - a relatively unexplored area - with the aim of a big discovery.

Oil Minister Hardeep Singh Puri, on several occasions, has expressed confidence in India making a ‘Guyana-sized’ discovery in the Andaman waters, which could alter the country’s oil and gas landscape.

The possibility of such a discovery is a major positive as the country is dependent on crude oil imports for around 90 percent of its domestic requirements, paying in foreign exchange to source oil.

Status of exploration activity in Andamans

India’s state-run upstream companies Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL) have commenced drilling wells - initial steps of exploration - in the Andaman blocks, and are waiting for an oil and gas discovery in the area.

Both the companies currently have two blocks each in the Andaman basin.

ONGC has two deep and ultra-deep water blocks, AN-UDWHP-2020/1 and AN-UDWHP-2020/2, in the Andaman basins which the company had won in the sixth open acreage licensing programme (OALP) round. OIL also has two shallow-water blocks, AN-OSHP-2018/1 and AN-OSHP-2018/2, in the Andamans, which the oil explorer won in the third OALP round.

The companies had completed seismic surveys of their blocks in 2023 and submitted results to the Indian government’s Directorate General of Hydrocarbons (DGH).

According to DGH’s hydrocarbon report 2023-24, Andaman is a Category II basin, implying that the basin has sub-commercial discovery in place, and has the potential to be commercially produced.

The report said the basin occupies an area of 2.49 lakh square km, and has been appraised to the extent of 2.17 lakh square km (87 percent), while the active area under operation stands at 21,063 square km.

Why is government interested in Andaman?

India is hugely dependent on oil and gas imports, with nearly all of India’s crude oil coming from other nations, and up to 50 percent of the natural gas requirements is also imported by the country.

This, at a time when India’s oil and gas production has largely remained stagnant in the recent years. The Oil Ministry data showed that India’s crude oil production in fiscal 2024-25 declined to 28.7 million metric tonnes (mmt), from 29.4 mmt in the last year. In contrast, consumption of petroleum products - a measure of fuel demand - rose during the year.

Amid rising domestic fuel demand and declining production, the Indian government is aiming to ramp up exploration activity in the country, vital to increase the oil and gas output.

With this objective, the Indian government aims to increase exploration acreage to 0.5 million square km by 2025 and 1 million sq km by 2030. In the latest OALP round, the government is opening up another 2.5 lakh sq km for exploration.

Amid efforts of arresting overall production decline of the country, the Indian government is betting big on finding a discovery in the Andaman waters. The basins in Andaman are expected to be sitting on large reserves of hydrocarbons, and India is pushing for oil and gas exploration activities for energy security.

What about policy changes?

With an eye on boosting investment in oil and gas exploration in India, the government had passed the Oilfields (Regulation and Development) Amendment Bill, 2024, earlier in the year. The new laws by the government are aimed to provide policy stability and promote ease of doing business in the sector, in turn inviting international oil companies (IOCs) to invest in the country.

More recently, the Indian government also proposed key reforms in the sector through the Draft Petroleum & Natural Gas Rules, 2025. According to the PNG rules, the government would introduce an investor-friendly stabilisation clause, designed to protect lessees from adverse impacts of future legal or fiscal changes, such as increases in taxes, royalties or other levies, by allowing compensation or deductions.

“These reforms replace the outdated Petroleum Concession Rules, 1949 and Petroleum and Natural Gas Rules, 1959, and follow the recent amendment of the Oilfields (Regulation and Development) Act, 1948. They are also timed to precede OALP Round X, India’s largest-ever exploration and production bidding round,” the government said.

The oil ministry added that for the first time, the draft rules permit operators to undertake integrated renewable and low-carbon projects—including solar, wind, hydrogen, and geothermal energy—within oilfield blocks, provided they meet safety standards.