India Launches $10.5 Billion Oil Security Push

Section: Energy
Format: Special Report
Author: Sinisa Brkic (sb)

India is preparing a major expansion of its energy security strategy. State owned Oil and Natural Gas Corporation plans to invest about $10.5 billion in deepwater and ultradeepwater exploration over the next five years, while additional projects are intended to strengthen strategic crude storage and international energy trading. The approach reflects a broader shift in New Delhi’s energy policy. India is not seeking immediate independence from global oil markets, but greater control over domestic production, emergency reserves and access to international supply at a time when geopolitical risks are exposing the vulnerabilities of large import dependent economies.

A major bet beneath the seabed

ONGC plans to invest 1 trillion rupees, approximately $10.5 billion, in deepwater and ultradeepwater exploration over the next five years. The state controlled producer intends to drill 87 wells by March 2031, turning the program into one of the most significant new exploration efforts in India’s upstream energy sector.

The drilling campaign is expected to accelerate over several financial years. ONGC plans eight deepwater and ultradeepwater wells in FY 2026/27, followed by ten in the next year, then 20, 22 and 27 wells in the three financial years through March 2031. The objective is clear, although the geological outcome remains uncertain. India needs major new discoveries if it is to reverse the long decline in domestic crude production and reduce the widening gap between national consumption and domestic supply.

Domestic production has become the strategic weakness

India’s crude oil production declined again in the financial year ended March 2026, marking an eleventh consecutive annual fall. Aging fields and the absence of sufficiently large new discoveries have weakened domestic output while demand continues to grow.

That imbalance has steadily increased India’s exposure to international markets. The country is the world’s third largest oil consumer and importer and depends on foreign suppliers for the overwhelming majority of its crude requirements. For New Delhi, that dependence is not merely a question of energy economics. It has direct consequences for inflation, the currency, transport costs, government finances and the broader resilience of the Indian economy whenever international oil markets come under pressure.

Offshore exploration becomes a national priority

ONGC’s investment comes after the Indian government approved Samudra Manthan, the National Offshore Exploration Scheme. The program is intended to accelerate offshore exploration, support deepwater drilling, improve seismic surveys and strengthen India’s domestic technological and industrial capabilities in the upstream sector.

The significance lies in the combination of state policy and corporate investment. Offshore exploration is increasingly being treated not simply as a commercial activity but as a strategic component of national energy security. Deepwater development remains expensive and technically demanding. Capital must often be committed years before a field can produce meaningful volumes, while geological uncertainty means that substantial investment does not guarantee commercially viable discoveries.

Mangalore strengthens India’s emergency buffer

Exploration is only one part of the wider strategy. ONGC also plans to invest around 70 billion rupees in a new strategic petroleum reserve in Mangalore, adding another layer of protection against sudden supply disruptions.

The proposed facility would have a capacity of 1.75 million metric tons of crude oil. With India’s existing dedicated strategic petroleum reserve capacity standing at about 5.33 million metric tons, the project would represent a substantial expansion of the country’s emergency stockpile.

Strategic reserves serve a different purpose from new domestic production. Exploration can strengthen supply over the long term, while stored crude provides governments with immediate flexibility when imports are disrupted or global markets experience severe stress. That distinction is central to India’s emerging approach. New Delhi is attempting to address both structural dependence and short term vulnerability at the same time.

Dubai or Singapore could form the third pillar

ONGC is also preparing to establish an international trading company by March 2027, with Dubai and Singapore under consideration as possible locations. The planned operation could handle as much as 50 million metric tons of crude oil, refined fuels and gas annually.

The venture would move ONGC further into the global commodity trading system and expand its role beyond exploration and production. A large international trading arm could improve access to supply, increase flexibility in sourcing and give the company greater visibility across global physical energy markets. For India, that capability could become particularly valuable during periods of disruption. A producer that can combine domestic exploration, strategic storage and international trading has more options than one that depends primarily on buying crude through established supply channels.

Geopolitical pressure is changing the calculation

The timing of the investment is significant. Conflict and instability in the Middle East have renewed concerns over shipping routes, insurance costs, tanker availability and the security of global oil flows. India has already demonstrated that it can alter its sourcing strategy rapidly. Russian crude has become a major part of the country’s import mix, allowing refiners to diversify away from traditional suppliers and take advantage of changing market conditions.

That flexibility, however, does not eliminate dependence. It changes the source of supply without changing the underlying fact that India remains heavily reliant on imported crude. The strategic question for New Delhi is therefore no longer simply where to buy oil. It is how to create enough domestic production, storage capacity and commercial flexibility to reduce the consequences when external supply becomes more expensive, politically complicated or physically disrupted.

Deepwater remains the largest uncertainty

The scale of ONGC’s planned spending should not be mistaken for certainty of success. Deepwater exploration involves substantial geological, financial and technological risk, and even major discoveries can require years before commercial production begins. India’s recent offshore experience illustrates the challenge. Resource potential does not automatically translate into expected output, particularly when reservoirs are technically complex or infrastructure requirements increase development costs.

ONGC has acknowledged that significant new discoveries will be necessary if domestic production is to return to sustained growth. The 87 well campaign therefore represents a major strategic investment, but its eventual contribution to national supply will depend on what is actually found beneath the seabed. India can increase investment, improve geological data and expand technical capabilities. It cannot guarantee the commercial quality of future discoveries.

Energy security is becoming a system, not a single project

What makes the new strategy important is the way its individual components fit together. The $10.5 billion deepwater program targets domestic supply. The planned Mangalore reserve strengthens emergency protection. The proposed international trading arm expands India’s ability to operate across global energy markets. Taken together, they reveal a more sophisticated definition of energy security. India is not attempting to isolate itself from the international oil system, an unrealistic objective for an economy of its scale and consumption profile.

Instead, New Delhi is building more options inside that system. Whether the deepwater campaign produces major commercial discoveries will take years to determine. The strategic direction is already much clearer. India wants to produce more oil at home, hold more crude in reserve and gain greater control over how it buys and trades energy abroad. In an increasingly unstable global market, that combination is becoming an essential part of economic and national security.