India Accelerates Oil Exploration Amid Growing Demand and $100 Billion Investment Push

Key Highlights

1. Current Prices: Fuel oil at ₹48.5/kg in Mundra; Base oil at ₹68/kg in Delhi; Industrial lubricants priced between ₹87–₹122/liter.
2. Exploration Drive: Only 10% of India’s basins are explored; the government targets 16% by the end of 2024 to unlock 22 billion barrels.
3. Global Collaborations: BP-Reliance and ONGC ventures are driving deepwater exploration, with increased bids for offshore blocks.
4. Strategic Shift: India eyes long-term reduction in oil imports, supported by $100B in upstream investments by 2030.

Petroleum Product Prices Hold Steady Across Regions

• In Delhi, Base Oil (SN150) is being offered at ₹68 per kilogram. 
• Fuel Oil (Virgin 180cST Furnace Oil) is available in Mundra at ₹48.5 per kilogram.
• Rubber Process Oil (Paraffinic 245) is priced at ₹72 per liter in Delhi. In Bhiwadi, LubriEdge Hydraulic Oil (Hydraulic Oil 68) is available at ₹87 per liter.
• Gear Oil (Gear Oil 150) at ₹115 per liter, LubriEdge Rust Preventive Oil (Water Displacing Type - WDM) at ₹122 per liter.
• Metal Working Fluid (Soluble Cutting Oil) is priced at ₹112 per liter.

India’s Import Dependency Triggers Urgent Exploration Push

• India remains heavily reliant on crude oil imports, sourcing nearly 87% of its oil requirements from countries like Russia, Iraq, Saudi Arabia, UAE, and the U.S. 
• This dependence has historically placed pressure on India’s current account deficit and weakened the rupee due to substantial capital outflows—$132.4 billion spent on oil imports in the 12 months to mid-2024 alone.
• However, a significant shift in India’s upstream energy dynamics is on the horizon. Despite having 3.36 million sq km of sedimentary basins, only 10% is currently under exploration. 
• Efforts are now underway to raise this to 16% in 2024, unlocking potential reserves of up to 22 billion barrels spread across underexplored Category-II and III basins such as Mahanadi, Andaman Sea, Bengal, and Kerala-Konkan. 
• These basins are thought to contain more oil than the U.S. Permian Basin, which has yielded 14 billion of its estimated 34 billion barrels.
• Major state-run players like ONGC and Oil India are already drilling and developing projects under the Open Acreage Licensing Policy (OALP). With 144 blocks covering 244,007 sq km awarded under this policy so far, both deepwater and ultra-deepwater exploration is picking up, signaling a future reduction in import dependency.

Global & Domestic E&P Players Accelerate Deepwater Projects

• India’s government, recognizing the economic and strategic implications of its oil dependency, is aggressively pursuing domestic oil exploration and production. The country aims to tap vast untapped reserves through multi-billion-dollar investments, including a projected $100 billion in E&P opportunities by 2030.
• ONGC is spearheading deepwater developments in the Krishna-Godavari Basin, with over $10 billion allocated for projects in its KG-DWN-98/2 block. Meanwhile, Oil India Ltd is pushing to begin exploration in Nagaland, pending regional approvals.
• Global majors are taking note. BP Plc, in partnership with Reliance Industries, is operating deepwater projects and a large-scale retail fuel network in India. The JV has also bid for new offshore blocks in collaboration with ONGC, reflecting growing foreign interest in India’s upstream sector.
• Furthermore, the U.S.-India trade tensions, particularly tariffs imposed during Donald Trump’s previous term, have indirectly nudged India to focus inward, strengthening domestic industries and building self-reliance in critical sectors like energy. Financial institutions like Motilal Oswal view this as a pivotal moment for India to reduce trade exposure and increase domestic production.

Expert Opinion: India to Lead Oil Demand Growth, Reduce Imports

With domestic exploration expanding and foreign participation growing, India is poised to reduce its crude import dependency over the next decade. Analysts forecast India will soon overtake China as the leading driver of global oil demand growth, fueled by its population growth, industrial expansion, and slower EV adoption. The upstream sector's transformation is expected to create a more balanced demand-supply scenario and attract consistent global investment inflows.