India’s Oil and Natural Gas Corp. is preparing to bet billions of dollars on deepwater and ultra-deepwater exploration, boosting spending in a push that could help one of the world’s top oil importing nations reduce reliance on overseas supply. 

“Onshore we have more or less drilled, appraised or acquired data in most of the basins,” Sushma Rawat, director of exploration for the state-owned giant, said in an interview. “But there are still large tracts offshore where we have very sparse data, where almost no wells have been drilled.”

India, with a fast-growing appetite for crude, is eager to reduce its fuel import bill and bolster energy security, and has encouraged companies like state-controlled ONGC to do more to tap domestic oil and gas reserves. It’s a gamble that, if successful, would yield rewards for producers and for a government looking to reduce its overseas dependence.

Rawat said ONGC plans to bid aggressively in upcoming government auctions to increase its exploration acreage to 500,000 square kilometers (193,050 square miles) by March 2026, from around 163,000 square kilometers today. Annual spending will rise to 110 billion rupees ($1.3 billion) from an annual 70 billion to 80 billion rupees.

For ONGC, the exploration push is also about countering a decline in production. In the decade to the end of March last year, oil output dropped 17.5% to 19.6 million tons, while gas shrank just over 10% to 20.9 billion cubic meters — a decline that has left India vulnerable to surging import costs.

ONGC accounts for 66% of India’s oil output and 58% of its gas. That’s partly offshore, but in shallow waters. The only producing deepwater project is its KG-DWN-98/2 block in the Krishna Godavari basin. Crude oil output there is due to start in May — well past the original target of 2019. 

Prime Minister Narendra Modi’s government had set a goal of cutting imports by 10% by 2022 and halve them by 2030, but missed the first target, with import dependence increasing instead. No fresh goals have been publicly announced, but India last year released nearly one million square kilometers of acreage previously closed to exploration for military, environmental and other reasons.

Rawat and officials at ONGC want to leverage the opportunity, trying to speed up efforts by striking a string of partnerships with Exxon Mobil Corp., Chevron Corp. and TotalEnergies SE. ONGC holds just over half of the country’s leased exploration acreage, making it an appealing partner.

Now the challenge for ONGC is to turn broad agreements into tangible exploration alliances, said Angus Rodger, upstream research director for Asia Pacific at Wood Mackenzie: “The Indian government wants to see new partnerships emerge, between Indian players and the best international explorers.”

The global oil majors, wary of the risks associated with India’s offshore potential, are pushing for better conditions from the Indian government, Rawat said, including with the addition of clauses on arbitration, reassurance around the stability of the fiscal regime and on criminal liability.