India Unveils Major Gas Discovery in Andaman-Nicobar Basin

A significant gas discovery in the Andaman-Nicobar Basin has the potential to enhance India’s domestic upstream production and improve energy security. The confirmation of hydrocarbons at the Sri Vijayapuram-2 well was announced during the Basin Analysis conference in Mumbai. This well is part of a three-well exploration initiative led by Oil India, which was launched last year in the Andaman Block AN-OSHP-2018/1, awarded under the Open Acreage Licensing Policy (OALP) Bid Round II in 2019.

Drilled to a depth of 2,650 meters in the Andaman deepwater region, the well reached a water depth of 295 meters. Hardeep Singh Puri, India’s Minister of Petroleum and Natural Gas, confirmed that initial production testing between 2,212 and 2,250 meters showed the presence of natural gas with approximately 87% methane. This discovery could mark a turning point for India’s offshore exploration efforts.

Potential for Economic Impact and Energy Security

The announcement of this discovery aligns with India’s broader energy strategy, particularly under Prime Minister Narendra Modi’s ‘Samudra Manthan’ initiative, which aims to explore untapped deepwater oil and gas reserves. The Andaman deepwater region has remained largely unexplored due to high associated costs and technical challenges, compounded by a lack of high-quality seismic data.

Despite its geological promise, the Andaman-Nicobar Basin has only seen a limited number of exploration wells drilled over several decades. The historical reluctance to invest stems from the basin’s frontier status and the lack of proven success to attract operators. This recent discovery is expected to validate the hydrocarbon potential of the area and encourage further investments, potentially leading to the development of new offshore infrastructure, including production platforms and pipelines.

As domestic gas production continues to decline, new discoveries such as this one are critical for India’s energy landscape. They can facilitate a transition to a low-carbon future by reducing reliance on coal and enhancing energy security. Natural gas, as a cleaner fossil fuel, plays a crucial role in this shift, potentially supporting India’s climate goals.

Challenges and Future Outlook

While the discovery could bolster India’s gas supply, several factors will determine its impact, including the size of the reserves, development speed, cost management, and environmental considerations. The establishment of deepwater potential, combined with favorable fiscal terms, may attract international oil companies (IOCs) to invest in India’s under-explored basins.

Deepwater exploration is both capital-intensive and technologically demanding, which means continuous efforts by national oil companies (NOCs) like ONGC and Oil India are essential. These efforts may attract IOCs equipped with advanced technologies, thereby accelerating the pace of discovery and extraction.

The recent interest from IOCs is exemplified by the July 2025 memorandum of understanding (MoU) between ONGC and BP, which aims to enhance geological understanding and unlock further hydrocarbon potential in Indian offshore basins. As partnerships evolve and new discoveries emerge, they could catalyze an influx of foreign investments into India’s energy sector.

Nevertheless, environmental risks associated with deepwater operations require careful management. Concerns over marine ecosystems, spill risks, and greenhouse gas emissions will be critical as exploration progresses in the Andaman-Nicobar region.

In summary, while the new gas reserves in India offer a strategic advantage in enhancing energy security and supporting industrial growth, the country’s reliance on its NOCs will remain a defining characteristic of its energy landscape. Improved regulations and transparency in data sharing will be essential for enticing IOCs to actively participate in exploring these frontier basins, ultimately shaping the future of India’s hydrocarbon industry.