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Energy & Economy | June 8, 2026
In September 2025, a state-owned drilling company confirmed hydrocarbons in a well drilled 17 kilometres off the east coast of the Andaman Islands. Nine months later, a second well in the same block struck gas again. Union Petroleum Minister Hardeep Singh Puri called it “an ocean of energy.” Two successful wells out of three drilled. A basin untouched for decades. And an India that currently imports nearly 50 percent of its natural gas needs from a world that has never felt more unstable. This article explains what the Andaman discovery actually is, what it could mean, and how long it will take to matter.
Table of Contents
- Part I: Why India Needed This Discovery LNG import dependence, West Asian crisis, Hormuz exposure, energy bills
- Part II: What Oil India Actually Found Vijayapuram-2 and Vijayapuram-3, well depths, methane content, OALP block history
- Part III: How Big Could This Be HRAS estimates, the 11.6 billion barrel claim, Guyana comparison, Myanmar analogy
- Part IV: The Samudra Manthan Mission PM Modi’s Independence Day announcement, ONGC’s $20 billion rig programme, ONGC-BP partnership
- Part V: The Challenges Nobody Should Ignore From discovery to production, appraisal, deepwater costs, environmental constraints
- Part VI: The Strategic Angle Strait of Malacca, Act East Policy, Bay of Bengal energy geography
- Part VII: A Realistic Timeline What happens next and when India could realistically see first gas
- Frequently Asked Questions
50%
Share of India’s natural gas demand currently met through LNG imports
2 of 3
Exploratory wells in Andaman Block AN-OSHP-2018/1 that confirmed gas presence
371 MMtoe
Estimated hydrocarbon resources in the Andaman Basin per India’s HRAS assessment
$20 Bn
ONGC’s planned deepwater rig programme under the Samudra Manthan Mission
Part IWhy India Needed This Discovery
An Import Bill Built on Borrowed Stability
India imports roughly 85 percent of its crude oil. On natural gas, the dependence is somewhat lower but still severe. Close to 50 percent of India’s natural gas requirement comes from imported LNG. That figure has not moved in the right direction for years. The IEA projects India’s LNG imports to reach 64 billion cubic metres per year by 2030, more than double the 2023 volume. Domestic gas production is growing, but slowly. The gap between what India produces and what it consumes keeps widening.
For decades, India managed this dependence through long-term contracts with Gulf suppliers, primarily Qatar. Qatar’s Ras Laffan complex alone supplied about 41 percent of India’s total LNG imports in 2024-25, amounting to 11.2 million tonnes. A single supplier. A single facility. One maritime chokepoint.
The West Asian Crisis and Its Energy Shock
Then came the US-Iran tensions of early 2026. The Strait of Hormuz, through which 90 percent of India’s LPG and 60 percent of its LNG pass, faced closure threats. Brent crude, which was trading around $65 to $72 a barrel through January and February 2026, surged past $109 within days of the conflict escalating and touched nearly $120 at its peak. The rupee fell to a record low near Rs 92.34 against the dollar. India’s strategic petroleum reserves covered only about 25 days of crude and 10 days of LNG.
The government responded with emergency measures. A Natural Gas Control Order was issued under the Essential Commodities Act. Indian refineries ramped up domestic LPG yields. Alternative LNG cargoes from the US and Australia were urgently sourced. But the larger structural point was impossible to ignore: India’s energy supply chains remain dangerously concentrated in one of the world’s most volatile regions.
The Numbers Behind the Vulnerability: In 2024-25, India imported 27 million tonnes of LNG. Of that, 11.2 million tonnes came from Qatar’s Ras Laffan facility alone. The Strait of Hormuz handles over 50 percent of India’s LNG transit. An extended Hormuz closure, even for 30 days, would exhaust India’s reserves and cause severe industrial disruption.
This is precisely why the Andaman discovery matters in 2026 in a way it would not have mattered in 2016. India’s need for domestic gas production is now strategic, not merely economic. Every cubic metre produced at home is one less cubic metre that must be imported through a contested maritime route.
Part IIWhat Oil India Actually Found
The First Well: Vijayapuram-2 (September 2025)
Oil India Limited is a Maharatna public sector undertaking. It operates primarily from Assam and Rajasthan but holds offshore exploration blocks. In 2019, it was awarded Andaman Block AN-OSHP-2018/1 under the Open Acreage Licensing Policy (OALP) Bid Round II. The OALP system, introduced in 2017, allows companies to identify areas of interest and apply for exploration licences year-round rather than waiting for scheduled bid rounds. It was a deliberate policy to accelerate India’s chronically slow upstream exploration.
Oil India launched a three-well exploration campaign within that block. The first successful result came in September 2025 at the Sri Vijayapuram-2 well. The well sits 17 kilometres off the east coast of the Andaman Islands, at a water depth of 295 metres, drilled to a target depth of 2,650 metres. Initial production testing between depths of 2,212 and 2,250 metres confirmed the presence of natural gas through continuous and intermittent flaring. Gas samples were shipped by vessel to Kakinada for laboratory analysis. The initial field reading showed approximately 87 percent methane. Subsequent laboratory testing at Kakinada returned a result of approximately 97 percent methane, with only minor traces of ethane and propane. That purity level is exceptionally high for an early exploratory well.
What 97 percent methane means in practice: Pipeline-quality natural gas typically requires methane content above 85 to 90 percent. At 97 percent, the Vijayapuram-2 gas is essentially pipeline-ready with minimal processing required. High-methane, low-contaminant gas reduces the capital cost of monetisation significantly. Compare it to discoveries that yield gas with high CO2 or hydrogen sulphide content, which require expensive treatment before sale or injection into the national grid.
The Second Well: Vijayapuram-3 (June 2026)
The second confirmation came on June 3, 2026, when Oil India announced gas presence in the Vijayapuram-3 well. This well is 15 kilometres off the east coast at a water depth of 355 metres. Production testing at a depth of over 1,900 metres in the Eocene formation established gas presence through continuous flaring. The Eocene formation is a geological layer roughly 34 to 56 million years old. Finding gas in the Eocene matters because it suggests an active hydrocarbon system, not just an isolated pocket.
With two hits from three wells, the block has confirmed what geologists long suspected: the Andaman Basin contains an active, gas-bearing geological system. Oil India is now processing 3D seismic data and conducting gas sampling alongside isotope studies to determine composition, calorific value, and the origin of the hydrocarbons.
| Parameter | Vijayapuram-2 (Sep 2025) | Vijayapuram-3 (Jun 2026) |
|---|---|---|
| Distance from shore | 17 km (east coast, Andaman Is.) | 15 km (east coast, Andaman Is.) |
| Water depth | 295 metres | 355 metres |
| Drilled depth | 2,650 metres | Over 1,900 metres (Eocene formation) |
| Gas confirmation method | Continuous and intermittent flaring | Continuous flaring |
| Methane content | ~97% (lab-tested at Kakinada; initial field reading ~87%) | Under analysis (isotope studies ongoing) |
| Geological formation | Shallow offshore carbonate zone | Eocene (34-56 million years old) |
| Block | AN-OSHP-2018/1, OALP Round II | AN-OSHP-2018/1, OALP Round II |
| Status | Appraisal phase; 3D seismic underway | Gas sampling and isotope studies |
To be clear about what this stage means: neither well has provided a reserve estimate. Both have confirmed the presence of hydrocarbons. That is the first test in a long process. The next steps are appraisal drilling, extended well testing, and 3D seismic interpretation before anyone can state with confidence how much gas actually sits beneath the Andaman Sea floor.
Part IIIHow Big Could This Be
The Official Estimate and the Ministerial Projection
India’s Hydrocarbon Resource Assessment Study (HRAS), the government’s official geological inventory, estimates that the Andaman Basin could hold hydrocarbon resources of 371 million metric tonnes of oil equivalent. That converts to roughly 2.7 billion barrels of combined oil and gas. To put that in context: India currently produces about 230 million barrels of domestic crude annually. A 2.7 billion barrel basin, if confirmed and commercially developed, would represent more than ten years of current Indian crude production from a single frontier.
Minister Puri has separately suggested a directional estimate of 11.6 billion barrels. This figure appears to incorporate higher-end geological modelling that goes beyond the HRAS number. It is important to treat this figure as aspirational rather than confirmed. Until appraisal drilling produces reserve estimates compliant with international standards such as SPE-PRMS, no figure carries technical authority.
The Guyana Comparison and the Myanmar Analogy
Two comparisons appear frequently in discussions of the Andaman Basin’s potential. Both are worth examining honestly.
The Guyana comparison refers to the Stabroek Block offshore Guyana, where ExxonMobil discovered more than 11 billion barrels of recoverable resources between 2015 and 2022. Guyana went from having no meaningful oil production to becoming a major global producer within a decade. The comparison is tempting because Minister Puri has used it and because the geological settings do share certain features. However, the comparison requires extreme caution at this stage. Guyana’s discovery came from intensive appraisal with multiple large wells over years. The Andaman basin has, as of June 2026, two confirmed gas shows from early exploratory drilling.
The Myanmar analogy is more geologically grounded. Myanmar’s offshore blocks, just 200 kilometres north of the Andaman Islands, have historically produced 1.5 trillion cubic feet of gas annually. The Andaman basin shares similar tectonic origins and sedimentary sequences with Myanmar’s producing zones. Furthermore, major gas discoveries off north Sumatra by Harbour Energy and Mubadala Energy have confirmed that the broader Andaman-Sumatra geological arc is actively gas-bearing. India’s block sits at the northern end of this productive arc.
The geological logic: The Andaman Sea formed through back-arc spreading related to the Sunda subduction zone. Organic-rich marine sediments deposited over tens of millions of years created the conditions for hydrocarbon generation. The same geological processes produced gas fields in Myanmar and Indonesia. The basin’s exploration history was limited not because geologists doubted its potential but because of regulatory restrictions, environmental constraints, and limited seismic data in the area.
Part IVThe Samudra Manthan Mission
India’s Largest-Ever Offshore Exploration Push
The Andaman discoveries did not happen in isolation. They are part of a broader government-directed push to expand India’s upstream exploration. The scale of that push became visible on Independence Day 2025, when Prime Minister Modi announced the National Deep Water Exploration Mission, codenamed Samudra Manthan.
The mission targets India’s Exclusive Economic Zone across multiple basins: the Andaman offshore, the Krishna-Godavari Basin off the Andhra coast, the Mahanadi Basin, the Cauvery Basin, and the Bengal-Purnea offshore. The Andaman Basin survey alone will cover 43,000 line kilometres of seismic data collection. The Bengal-Purnea and Mahanadi surveys together will add nearly 45,000 more. These surveys will run for close to two years.
To execute the deepwater part of the mission, ONGC launched a global tender in March 2026 for a fleet of drillships and semi-submersible rigs, with a combined estimated cost of $18 to $20 billion. Companies sought rig mobilisation within 80 days, which signals an unusual urgency. The West Asian energy crisis, which had begun the same month, clearly accelerated the programme.
The ONGC-BP Partnership
In July 2025, ONGC and BP signed a memorandum of understanding to collaborate on drilling stratigraphic wells across four Indian offshore sedimentary basins: Andaman, Mahanadi, Saurashtra, and Bengal. Stratigraphic wells are drilled specifically to understand rock layers, fluid presence, and geological structure rather than to produce. They are the scientific foundation on which commercial development decisions rest. BP brings deepwater expertise from the Gulf of Mexico, North Sea, and Trinidad. The partnership signals that the Andaman basin is attracting credible international technical attention, not just domestic enthusiasm.
| Component | Details | Status (June 2026) |
|---|---|---|
| Samudra Manthan Mission | National Deep Water Exploration Mission, announced Aug 15, 2025 | Active, rig tenders issued |
| ONGC rig programme | Drillships and semi-submersibles, $18-20 billion, up to 5-year contracts | Global tender, pre-bid meetings held |
| Andaman seismic survey | 43,000 line km of new seismic data collection | Underway |
| ONGC-BP MoU | Stratigraphic wells in Andaman, Mahanadi, Saurashtra, Bengal basins | Signed July 2025 |
| Oil India 3D seismic | Acquisition and processing of 3D seismic in AN-OSHP-2018/1 | Underway |
| OALP blocks | ~1 million sq km of previously restricted offshore now open for exploration | Active licensing ongoing |
The 2022 decision to open nearly one million square kilometres of offshore areas that were previously designated as “No-Go” zones forms the foundational policy shift behind all of this. That decision unlocked the Andaman-Nicobar frontier. Without it, Oil India’s three-well programme would not have been possible.
Part VThe Challenges Nobody Should Ignore
From Discovery to First Gas: A Long Road
Two successful exploratory wells confirm a hydrocarbon system. They do not confirm commercial viability. The journey from where India stands today to actual gas production in the Andaman Basin involves several distinct phases, each with its own risks, costs, and timelines.
First comes appraisal. Additional wells must be drilled at different points within the block to understand how large the accumulation is, how porous and permeable the reservoir rock is, and how the pressure system behaves. Second comes reservoir evaluation, where extended well tests run for months to measure sustained production rates. Third come engineering studies that translate geological findings into production facility designs. Fourth comes the actual development: installing subsea infrastructure, pipelines, and processing facilities. Even in the most optimistic scenario, first commercial gas from the Andaman Basin is a decade away. A conservative estimate puts it at 2035 at the earliest.
The commercialisation gap: The Andaman Basin’s most experienced observers note that while the discovery is a genuine confirmation of hydrocarbon presence, the basin’s potential to become a significant domestic gas contributor depends on reserve scale, commercial pricing, and infrastructure economics that are not yet known. Even a technically successful discovery can be economically non-viable if the gas-to-shore distance, water depth, and processing costs make it uncompetitive against imported LNG.
Environmental Constraints and Marine Ecosystem Risk
The Andaman and Nicobar Islands host one of the richest marine ecosystems on the planet. The islands sit within a biodiversity hotspot. Deepwater drilling in these waters carries genuine environmental risks: potential spills, noise pollution affecting marine life, seabed disturbance, and the risk of gas venting during drilling. India’s environmental clearance process for offshore blocks in ecologically sensitive areas has historically been slow and contested. Any commercial development in the Andaman Basin will face scrutiny from environmental regulators, and rightly so. Managing these risks is not optional; it is a precondition for social licence to operate.
The Price Competitiveness Question
Deepwater gas production is expensive. Offshore platforms, subsea pipelines, and gas processing facilities represent capital expenditure that must eventually be recovered through gas sales. The economics of any Andaman gas project will depend on whether the domestic gas price supports the investment. India’s administered gas pricing regime has historically held domestic prices below international parity, which has deterred upstream investment. The government has modified pricing for deepwater discoveries under a “premium price” category, but investors will scrutinise the long-term price certainty of any commercial development.
Part VIThe Strategic Angle
Geography as an Asset
The Andaman and Nicobar Islands stretch for nearly 800 kilometres through the eastern Indian Ocean. Their eastern coast faces the Bay of Bengal. Their western edge lies close to the Strait of Malacca, through which approximately 40 percent of global trade passes. China’s maritime energy supply lines also run through the Malacca Strait, which is why Beijing has long sought alternatives and why India’s presence here carries weight far beyond energy policy alone.
A commercial gas production facility in the Andaman offshore would strengthen India’s economic and strategic footprint in the eastern Indian Ocean at a time when competition for influence in this zone is intensifying. India’s Act East Policy, which aims to build closer ties with Southeast Asian economies, gains a concrete energy dimension if the Andaman basin proves commercially productive. Gas exports to Thailand, Myanmar, or Bangladesh become conceivable in the long term.
Countering China’s Bay of Bengal Presence
China has invested heavily in port infrastructure and energy projects in Myanmar, Bangladesh, and Sri Lanka through the Belt and Road Initiative. An Indian offshore energy hub in the Andaman Sea would create a counterweight, demonstrating India’s capacity to develop and hold strategic assets in contested maritime space. The geopolitical dividend of the Andaman gas story may ultimately prove as valuable as the economic one, regardless of how much gas is actually produced.
The regional energy connection: Myanmar’s offshore gas fields, producing around 1.5 trillion cubic feet annually, lie just 200 kilometres north of India’s Andaman blocks. Indonesia’s large Masela gas field in the Banda Sea anchors the southern end of the same geological arc. India’s confirmed gas presence in the middle of this arc positions the country as a credible player in the eastern Indian Ocean’s emerging energy geography.
Part VIIA Realistic Timeline
What Happens Next, and When It Could Matter
Understanding the Andaman discovery requires separating three things: what has happened, what is underway, and what could happen. Conflating any of these three leads to either excessive excitement or unwarranted dismissal.
| Phase | Activity | Estimated Timeline |
|---|---|---|
| Current (2025-2026) | Exploratory drilling, 3D seismic acquisition, gas sampling, isotope studies | Now through 2027 |
| Appraisal (2027-2029) | Additional appraisal wells, extended well tests, reservoir characterisation | 2027 to 2029 |
| Feasibility (2029-2031) | Front-end engineering design, regulatory approvals, environmental clearances | 2029 to 2031 |
| Development decision | Final investment decision (FID) by Oil India and government, financing arrangements | 2031 to 2032 (optimistic) |
| Construction (2032-2035) | Subsea infrastructure, pipelines, offshore processing, gas-to-shore system | 3 to 4 years post-FID |
| First gas | Commercial production begins | 2035 at earliest; 2037-2040 more realistic |
Therefore, the Andaman gas boom will not solve India’s 2026 energy crisis. It will not reduce the LNG import bill by 2030. What it does is provide a credible domestic alternative for the next decade’s supply planning, reduce the negotiating disadvantage India faces at the LNG contract table, and demonstrate to global capital that India’s offshore basins are worth serious exploration investment.
The short-term solution to India’s energy vulnerability remains diversifying LNG suppliers, building more storage capacity, expanding the domestic pipeline network, and accelerating renewable energy deployment. The Andaman find is a long-game asset. Treating it as an immediate fix would be as misleading as dismissing it as irrelevant.
The Balanced Assessment
The Andaman Basin is a genuine and significant discovery. Two confirmed gas-bearing wells from a three-well campaign in a previously undrilled basin is an excellent early result by any global exploration standard. The 87 percent methane content is commercially attractive. The geological analogy with Myanmar and Indonesia is credible.
However, no reserve estimate exists. Commercial viability has not been demonstrated. The path from discovery to production spans a decade at minimum. Environmental and regulatory challenges are real. And the economics depend heavily on India’s domestic gas pricing policy, which has historically been the weakest link in attracting upstream investment.
The correct reading is: a strategically important, geologically promising, commercially unproven discovery at an early stage. India should treat it seriously, invest in its development, and resist the temptation to substitute celebration for the harder work of appraisal, policy reform, and infrastructure building that must follow.
Frequently Asked Questions
The Andaman Basin is a deepwater sedimentary basin in the Bay of Bengal, lying beneath the waters surrounding the Andaman and Nicobar Islands. Geologically, it formed through back-arc spreading related to the Sunda subduction zone, the same tectonic process responsible for gas fields in Myanmar and Indonesia. Geologists have long believed it holds hydrocarbons because the basin shares geological characteristics with producing regions directly to its north and south.
It remained largely unexplored for two main reasons. First, large portions of the offshore area were classified as “No-Go” zones, primarily due to proximity to the islands’ ecosystems and defence sensitivities. Second, the lack of high-quality 3D seismic data made it difficult to identify specific drilling targets with confidence. In 2022, the government opened nearly one million square kilometres of previously restricted offshore acreage, which unlocked the Andaman frontier for the first time.
The OALP was introduced in 2017 as part of India’s Hydrocarbon Exploration and Licensing Policy (HELP). Before OALP, companies had to wait for the government to announce exploration bidding rounds at specific intervals, often years apart. Under OALP, companies can identify any area within India’s sedimentary basins, submit an expression of interest, and apply for an exploration licence on a rolling basis throughout the year.
This was designed to accelerate India’s chronically slow exploration activity. Oil India identified the Andaman Block AN-OSHP-2018/1 through OALP’s discovery process and received the block in the second bid round in 2019. The three-well exploration campaign that produced both gas discoveries follows directly from that award. Without OALP, the block may have remained unlicensed for years longer.
Natural gas in India reaches households primarily through piped natural gas (PNG) connections and powers compressed natural gas (CNG) vehicles. Industries, including fertiliser plants, use natural gas as both a fuel and a raw material. Power plants and glass, ceramic, and textile factories run on gas. When LNG import prices spike, the cost increase transmits through the economy in multiple ways.
Fertiliser production becomes more expensive, raising the subsidy burden on the government or, eventually, the cost of food. Industrial energy costs rise, pushing up prices of manufactured goods. CNG vehicle owners may see fuel price increases. The West Asian crisis of early 2026 produced exactly these effects: industrial consumers on the gas grid saw supply cuts to about 80 percent of their average. A larger domestic gas base would buffer all of these effects.
The 371 million metric tonnes of oil equivalent (MMtoe) is from India’s Hydrocarbon Resource Assessment Study, the official government geological inventory. Converted to barrels, 371 MMtoe is roughly 2.7 billion barrels. This figure represents the geological estimate of total in-place resources, meaning what the rocks might contain before any deduction for recovery factors or commercial viability.
The 11.6 billion barrel figure cited by Minister Puri is a broader directional estimate that appears to use different geological modelling assumptions, possibly incorporating the entire prospective area of the basin rather than the specific assessed resource. Neither figure is a proven reserve. Proven reserves require detailed appraisal drilling, well testing, and independent reservoir engineering assessments. At this stage, both numbers should be understood as indicators of potential, not statements of confirmed resource.
No, not directly, and not for a very long time. Petrol and diesel prices in India are driven primarily by crude oil import costs, refining margins, central and state taxes, and the government’s pricing policy for oil marketing companies. The Andaman discovery is a natural gas find, not an oil find, though oil is not ruled out by further exploration.
Even on gas, the discovery would need to go through appraisal, development, and production phases that collectively take a decade or more. By 2035, if commercial production begins, domestic natural gas availability could grow, which would reduce LNG import costs and indirectly benefit industries and city gas distribution networks. But motorists filling petrol at a pump will not see a direct price impact from the Andaman gas discovery for many years, if at all.
The Samudra Manthan Mission, formally called the National Deep Water Exploration Mission, was announced by Prime Minister Modi on Independence Day 2025. The mission aims to comprehensively explore India’s offshore sedimentary basins through a combination of new seismic surveys, appraisal drilling, and strategic partnerships with global deepwater experts.
The basins targeted include the Andaman offshore basin, the Krishna-Godavari Basin off the Andhra coast, the Mahanadi Basin off Odisha, the Cauvery Basin in the south, and the Bengal-Purnea offshore. The Andaman Basin alone will receive 43,000 line kilometres of new seismic data. ONGC’s associated global rig tender, worth an estimated $18 to $20 billion, is the largest deepwater drilling programme India has ever attempted. The mission is designed to run in “mission mode,” meaning it has specific timelines, budgets, and accountability structures rather than being an open-ended research activity.
Promise, Patience, and the Long Game
The Andaman Gas Boom is real in one sense and premature in another. Two gas-bearing wells in an undrilled basin, confirmed back-to-back, is a genuine exploration success. The basin’s geological pedigree is credible. The government’s commitment, through the Samudra Manthan Mission and ONGC’s $20 billion rig programme, is unprecedented in scale. India has finally decided to take its offshore frontier seriously.
But production is a decade away at best. The West Asian crisis that exposed India’s energy vulnerability in 2026 will not be solved by gas that flows in 2035. In the interim, India needs more LNG storage, more supplier diversification, and faster domestic renewable build-out. The Andaman discovery is not a substitute for any of these. It is a long-term asset that, if properly developed, can structurally reduce India’s import dependence in the 2030s and beyond.
What the discovery has already done is change the narrative around India’s upstream potential. For too long, India was seen, even by its own policymakers, as a country that imports energy because it simply does not have enough. The Andaman find, combined with the Krishna-Godavari basin’s deepwater gas potential, suggests the honest answer is more nuanced: India has not fully explored what it holds. That is the beginning of a different and more hopeful energy story.
So watch the appraisal results, not the press releases. The real story of the Andaman basin will be told in reservoir engineering reports over the next three years, not in ministerial tweets. If the numbers hold, India will have earned every bit of optimism. If they disappoint, the search must continue. Either way, the exploration has finally begun.
Disclaimer: This article is for informational and educational purposes only. All data on exploration activities, well depths, gas composition, and government policy programmes is current as of June 8, 2026. Reserve estimates cited reflect geological assessments and directional projections, not independently certified proven reserves. Production timelines are analytical estimates based on industry norms and do not represent government or company projections. Nothing in this article constitutes financial or investment advice.
