Page 53 - FIPI - Policy & Economic Report May 2026

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Key Policy developments/Significant news in Energy sector

1. Amid Crude Oil Shock, India Eyes Big Discoveries in Mahanadi and Andaman Basins

Amid the ongoing global oil crisis, India eyes fresh discoveries of oil and gas reserves in the Andaman and
Mahanadi basins. While the Western onshore and offshore basin has been surveyed and utilized nearly
to its limit, the Centre’s attention has pivoted towards its eastern region, including Bay of Bengal, and
Mahanadi basin, which spans across Orissa, and Chhattisgarh. India's major upstream oil and gas entities
such as Oil and Gas Corporation Ltd (ONGC), and Oil India Ltd (OIL) have doubled down their efforts into
identifying fresh alternatives in the Andaman basin.

This comes ahead of the South Asian country's mega oil and gas survey, which involves a collaborative
effort between several private enterprises and the central government. At the time of writing this report,
Brent crude price stood at 109.9 per barrel, while the rate of WTI crude oil was around $102 per barrel.
On other hand, Centre' expensive deepwater exploration and drilling gamble in the Andaman basin
continues ahead of the country's large-scale oil and gas survey.

The multi-basin geological survey involving the use of rigs, 3D cubicles will conduct across the Mahanadi,
Bengal-Purnea, Krishna-Godavari, Cauvery and Andaman offshore regions. This is being conducted to
reduce India's oil and gas import dependence on other countries, and find an alternative to its western
region discoveries as deep water exploration in the only resort left in that region. The Bengal-Purnea and
Mahanadi survey will itself cover 45,000-line kilometers (LKM), while the Krishna-Godavari survey will
cover nearly 43,000 LKM. Meanwhile, the Cauvery Basin will add another 30,000 LKM, and the Andaman
Basin survey will span another 43,000-line kilometers.

2. India plans to send new ships through Hormuz Strait to load oil & gas from Middle East

India plans to send ships through the Strait of Hormuz to load oil and gas from Middle East suppliers as
the U.S.-Iran war continues to threaten global energy security. The vessels will commence their journey
after receiving final approval from the government, though the number of ships, the volume of cargo or
the names of suppliers have not been revealed by official sources. It remains unknown if Iran or the U.S.,
which are blocking different parts of the Strait and the surrounding waters, have given permission to New
Delhi for this endeavour, since their approval is critical for the plan to work.

India’s External Affairs Minister Subrahmanyam Jaishankar met his Iranian counterpart Abbas Araghchi in
New Delhi on the sidelines of a BRICS summit, where he discussed this plan. India wants to import energy
supplies from the Middle East since switching to alternative sources would take longer and would also be
costlier. Though India has begun to purchase crude from Russia and other suppliers, it is still dependent
on the Middle East for the majority of its oil and gas supplies. Russian oil carries the risk of sanctions as
well, though Washington recently issued a waiver allowing the sale of Russian crude oil and petroleum
products already at sea. Shipping has been disrupted at the Strait of Hormuz, which handles a fifth of
global oil flows, since the US-Iran conflict began. This has severely impacted Asian countries like India,
which witnesses rising oil prices and LPG shortages, leading to the temporary closure of cafes and

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