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Natural gas

India's Ambitious Deepwater Drilling Project Hits Cost Escalations

Strategic Insights

— 1 min read

India's Oil and Natural Gas Corporation (ONGC), Oil India Ltd (OIL), and BP are facing significant cost overruns in their ambitious exploratory drilling project, which aims to probe geological formations deeper than 6,000 meters across four offshore basins to unlock untapped oil and gas reserves. The project, which is expected to help India's National Deep Water Exploration Mission (NDWEM) achieve its objectives, has seen the price of drilling a single well climb from 800 crore to approximately 1,200 crore.

The two state-run exploration and production (E&P) companies, ONGC and OIL, have teamed up with BP as the technical services provider to drill four stratigraphic test wells across Bengal, Saurashtra, Mahanadi, and the Andaman offshore regions. The initial sanction of 3,200 crore has since surged, and the project is set to commence in Q4 FY26 or FY27, depending on the availability of rigs, equipment, and services.

Key Takeaways:

  • The ONGC-OIL-BP stratigraphic drilling campaign is expected to play a pivotal role in unlocking new energy frontiers in India, provided it manages cost challenges effectively.
  • The project aims to drill four stratigraphic test wells across four offshore basins, with the initial sanction of 3,200 crore surging to approximately 4,800 crore.
  • ONGC and OIL have already conducted independent geological studies and engaged global oil majors like BP, Shell, and ExxonMobil for technical input.
  • The project is expected to help India's National Deep Water Exploration Mission (NDWEM) achieve its objectives and reduce import dependency.
  • The Andaman & Nicobar (A&N) offshore basin has been identified as a promising new hydrocarbon province, with India's Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) launching exploratory drilling in the Andaman ultra-deepwater zone.
  • Preliminary findings from geophysical data acquisition efforts have revealed multiple promising geological features that require validation through drilling.
  • The Andaman basin holds an estimated 371 million tonnes of oil equivalent (MMTOE) of hydrocarbon potential, according to the Hydrocarbon Resource Assessment Study (HRAS) of 2017.

Statistics:

  • Initial sanction: 3,200 crore
  • Surge in costs: approximately 1,000 crore (from 800 crore to 1,200 crore)
  • Drilling depth: 6,000-6,500 meters
  • Project commencement: Q4 FY26 or FY27
  • Number of stratigraphic test wells: four
  • Estimated hydrocarbon potential: 371 million tonnes of oil equivalent (MMTOE)

Sources:

  • Thehindubusinessline.com
  • Hydrocarbon Resource Assessment Study (HRAS) of 2017
  • Global Data Point
  • SyndiGate Media Inc.

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