Oil India’s future upstream strategy will aim to strengthen its position in the Northeast, Rajasthan, Cambay and Mahanadi, as well as expand offshore exploration capabilities in deep and ultradeep waters, its Chairman and Managing Director Ranjit Rath said.

And as the company plans to undertake large capital investments, the state-run upstream producer is increasingly using AI for reservoir modelling, drilling optimization, and predictive maintenance, Rath told Platts, part of S&P Global Energy, in an interview on the sidelines of India Energy Week in the western city of Goa last week.

“The tide has turned, and the investment climate for exploration opportunities is favourable in India due to significant policy reforms and far-reaching decisions such as releasing approximately 1 million sq. km of erstwhile no-go areas in the eastern coast, western coast and Andaman basin, including special incentives for Category-2 and Category-3 basins,” Rath said.

Out of the one million sq. km of no-go areas released by the government, 56,894 sq. km have already been awarded, 97,919 sq. km would be awarded as part of the 10th round of Open Acreage Licensing Policy — or OALP-X — and 845,187 sq. km would be awarded in the future, Rath said.

Under the OALP-X, 25 blocks spanning 182,589 sq. km across 13 sedimentary basins — including onshore, shallow water, deepwater and ultra-deepwater areas — have been offered. Additionally, nine contract areas are available under the Discovered Small Fields Round-IV, while 16 coalbed methane blocks are on offer in the special CBM bid rounds. The bid submission deadline for all blocks is Feb. 18, at 12 pm IST (1230 GMT), the petroleum ministry said in a statement.

India’s upstream output has been declining at an average annual rate of 1.1% over the past decade due to the natural depletion of mature fields operated by state-run producers, delays in monetizing existing discoveries and a reduced number of new discoveries, according to S&P Global Energy. To enhance domestic oil and gas production, India is increasingly focusing on exploring the country’s category-2 and category-3 basins.

Rath said the recent passage of the Oilfields (Regulation and Development) Amendment Bill, 2024, which addresses long-standing challenges related to regulatory clarity and procedural timelines, had set the stage for exploration successes.

“These policy reforms and favourable environment are encouraging international and national oil companies to tap the enormous hydrocarbon potential in India’s sedimentary basins,” he said.

In addition, several other initiatives for the upstream sector are under active consideration by the government.

The nation’s federal system divides powers between the central and state governments, requiring both to approve E&P activities. Land is a state subject, which requires state governments to regulate land use and grant state-specific approvals for E&P activities. The central government sets broad environmental policies, while states have the authority to manage land use and enforce environmental laws, necessitating multiple approvals from different regulatory bodies. “With oil and gas being a central subject, the central government may like to consider a single window approach for all oil and gas operations across territories,” Rath said.

Making steady progress
Oil India had significantly expanded its domestic acreages from 9,300 sq. km. in 2017-18 to 1,08,000 sq. km. — a 12-fold increase, spread across Assam Shelf, Assam Arakan fold belt, Rajasthan basin, Mahanadi basin, Cambay Basin, offshore areas in Andaman & Nicobar basin, Kerala Konkan basin and KG basin.

“We have completed two offshore wells in Andaman and the occurrence of gas was established in the second well in the Andaman and Nicobar Basin, confirming active petroleum systems and transforming Andaman from a conceptual frontier to a basin with proven hydrocarbon potential,” Rath said.

“The reported occurrence of gas could be a leading indicator of the presence of a source or migration pathway or accumulation of hydrocarbons, which will help in future exploration and drilling strategy,” he said.

With an outlay of around Indian Rupees 110 billion ($1.2 billion), Oil India has an extensive offshore exploration program, for which it is leveraging global expertise by engaging consultants and collaborating with global majors, such as TotalEnergies, he added. The company is in advanced stages of collaboration with international and national oil companies to realize the hydrocarbon potential of offshore regions in sedimentary basins.

“As a production enhancement measure, Oil India has introduced Well Portfolio Optimizer, an AI and machine learning-driven application that advances digital innovation in reservoir monitoring, production enhancement, proactive well management and timely intervention,” Rath said.

Downstream strategy
In downstream activity, Numaligarh Refinery Ltd, a subsidiary of Oil India, is on track to begin processing imported crude oil at its expanded units from the second half of fiscal year 2026-27 (April-March), following the completion of its capacity expansion from 3 million mt/year to 9 million mt/year, Rath said.

NRL currently uses mainly domestic crude as feedstock, with a capacity utilization rate of more than 100%. While NRL can process more than 100 crude assays, the design mix of the NRL refinery — once the expansion is complete — would be Arab Heavy and Arab Light crudes in a 70:30 ratio, he added.

“Further, NRL is also implementing a 360,000 mt/year polypropylene project. Mechanical completion of refinery upgradation has been achieved, and commissioning is ongoing,” Rath said.

NRL has been actively advancing its energy diversification efforts. Its 50,000 mt/year bioethanol plant at Numaligarh, developed through a joint venture company called Assam Bio Refinery Private Ltd., is expected to help expand its clean fuels footprint, while establishing a sustainable bamboo value chain and generating new livelihood opportunities in rural areas.

The share of non-fossil offerings by Oil India is expected to be about 5%-7% by 2030, which would be further ramped up to 12%-15% by 2040, Rath said.
Source: Platts