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Informist, Wednesday, Sept. 30, 2026

 

By Anand JC

 

MUMBAI – The Centre's decade-long energy reform push, accelerated sharply by the wars in recent years, has piqued the interest of new foreign investors in India's upstream and downstream oil industry, Gauri Jauhar, the executive director in the energy transition and clean tech global consulting team at S&P Global Energy, told Informist Wednesday. The Indian government's approach of not viewing the oil and gas industry solely as a revenue-generation avenue and ploughing risk capital into the sector has put it on foreign investors' radar.

 

Foreign investors' interest in the industry is now higher than it was in the past, Jauhar said, especially after the introduction of the National Offshore Exploration Scheme, or the Samudra Manthan scheme. The scheme was announced in July with an outlay of INR 840.84 billion in the first phase and will be implemented through 2030-31 (Apr-Mar). It seeks to 'de-risk' offshore ventures, with a focus on encouraging private capital, the government had said.

 

"Samudra Manthan is going to not just change the perception, but the reality of Indian upstream. Because whatever is material frontier in the deep water, underexplored, unexplored areas under the Category-II and Category-III basins, now risk capital will be able to come in," Jauhar said. Material frontiers are underexplored and unexplored deepwater areas where exploration is technically challenging and requires significant capital. Category-I basins already have discovered reserves and are producing energy. Category-II and Category-III basins are relatively less explored and lower-prospectivity basins, where the government has introduced specific incentives to encourage exploration.

 

Investor interest was motivated by the government's decision to deploy capital to accelerate offshore exploration and reduce some of the risks associated with frontier acreage - a reform that Jauhar said was among the hardest to achieve. Earlier in the day, Rajeev Lala, director of upstream strategies and transformation at S&P Global Energy, told reporters at a press conference that the oil and gas sector has traditionally been seen as an avenue for revenue security for the government through dividends from state-run companies.

 

With the government now bringing in risk capital, investors see an opportunity to tap into "less-discovered" exploration areas. "What India has done very well is that it has listened to investors. Investors wanted some amount of risk capital to come in. They wanted the government to bring back some of the cost-recovery elements that had been taken away in the move from production sharing contracts to revenue-sharing contracts," Jauhar said.

 

Under the older production-sharing contracts, contractors could recover eligible exploration and development costs before sharing profit petroleum with the government. Under the revenue-sharing model, contractors share a specified portion of revenue with the government from the start of production. According to Jauhar, the reform momentum dates back to 2016, when the Centre introduced marketing and pricing freedom for gas produced from deepwater, ultra-deepwater and high pressure-high temperature areas, where exploration and production involve higher costs and risks. The measure aimed to improve the viability of existing discoveries and incentivise future investment in such difficult fields.

 

"Sometimes the most difficult end of reform is the hardest to achieve. I would see it as a sort of almost a 10-year process where the intensification of that reform on the hardest-to-achieve reforms happened in the last 3-4 years," Jauhar said. "The investor looking at India today can say that my risk-reward equation is more balanced," Jauhar said.

 

The government has fast-tracked certain reforms in recent years in the wake of wars, including between Russia and Ukraine, and the US and Iran. "There were policy changes which had been thought of even several years back. But the crisis brings that opportunity to say - let's pull all the stops," Jauhar said.  

 

The government is in advanced stages of figuring out a way to address the price gaps in the upstream oil business for companies. "Right now, even though the pricing is remunerative enough to incentivise new volumes to come, we've been working very closely with the government on bringing more clarity on the pricing end," she said. "Because, on the price end, one is what is the valuation for the crude or gas you sell, and what is the valuation on the basis of which you are paying your taxes and levies. The gap there needs to be bridged," she said.  

 

End

 

Edited by Saji George Titus

 

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