India Unveils $10 Billion Oil Exploration Drive After Middle East Supply Shock

India is accelerating its domestic oil and gas exploration strategy with a $10 billion investment program, following what officials described as the country's most severe energy supply disruption in decades during the recent conflict in the Middle East.

The supply shock, which disrupted crude shipments through the Strait of Hormuz, has reinforced New Delhi's determination to strengthen domestic production and reduce its heavy reliance on imported energy.

Oil and Natural Gas Minister Hardeep Singh Puri said the recent crisis has provided fresh momentum for India's efforts to expand local hydrocarbon output and improve long-term energy security.

As part of the initiative, the government is preparing to open 250,000 square kilometers of previously unexplored territory for new oil and gas exploration, marking one of the country's largest licensing efforts in recent years.

India is the world's third-largest crude oil importer and the second-largest importer of liquefied petroleum gas (LPG), while domestic production satisfies only a small share of national demand.

During the 2025–26 fiscal year, India produced 25.98 million metric tons of crude oil, equivalent to roughly 522,000 barrels per day, enough to meet only about 10% of the country's oil consumption. Production remains well below its peak of more than 900,000 barrels per day recorded in 2011.

During the recent supply disruption, New Delhi broadened its network of crude suppliers from 27 to 41 countries, adding imports from Iran and Venezuela while increasing purchases from Russia and several African producers.

Puri said India is pursuing a pragmatic energy policy that prioritizes supply security over geopolitical or ideological considerations.

India's current oil production is concentrated in offshore fields near Mumbai, as well as onshore assets in Rajasthan, Gujarat and the northeastern state of Assam.

However, the government is increasingly focusing on the Andaman and Nicobar Islands, where officials believe the offshore Andaman Basin holds significant untapped hydrocarbon resources with geological characteristics comparable to major producing basins across Southeast Asia.

Puri described the region as an "ocean of energy opportunities," adding that India plans to drill a large number of deepwater and ultra-deepwater exploration wells to unlock its resource potential.

The minister said New Delhi is working with leading international energy companies and technical experts, including Petrobras, TotalEnergies, BP, Shell and ExxonMobil, to strengthen its offshore exploration capabilities.

Alongside its upstream investment program, India is moving ahead with the $9 billion Great Nicobar Island development project, which includes the construction of a major port, an international airport and a new city designed to reinforce the country's strategic presence in the Andaman Sea.

The exploration drive also builds on Prime Minister Narendra Modi's launch of the national "Samudra Manthan" deep-sea exploration mission in August 2025, aimed at identifying offshore oil and gas resources.

Despite rapid investments in renewable energy, nuclear power and ethanol blending, India's overall energy demand continues to expand at one of the fastest rates globally.

According to Puri, the country's energy consumption is growing at roughly three times the global average, with oil demand rising from 5 million barrels per day in 2021 to approximately 5.6 million barrels per day today. Consumption is expected to approach 6 million barrels per day in the near future, driven by sustained economic growth and rising household incomes.