India’s energy landscape has received a significant boost following the discovery of natural gas in the under-explored Andaman-Nicobar Basin. This find, confirmed at the recent Basin Analysis conference in Mumbai, has the potential to enhance domestic upstream production and strengthen the country’s energy security. The discovery, made by Oil India at the Sri Vijayapuram-2 well, raises questions about the basin’s capacity to contribute meaningfully to India’s natural gas supply and attract both national and international oil companies.
The well, part of a three-well exploration initiative by Oil India that began last year, is located in the Andaman Block AN-OSHP-2018/1. Drilled to a depth of 2,650 meters in water reaching 295 meters, the presence of hydrocarbons was confirmed by Hardeep Singh Puri, India’s Minister of Petroleum and Natural Gas. He stated that the initial production testing showed gas was present, with approximately 87% methane content. This development aligns with India’s broader strategy to explore its deepwater oil and gas potential under Prime Minister Narendra Modi‘s ‘Samudra Manthan’ initiative.
Exploration Challenges and Opportunities
Despite its geological promise, the Andaman-Nicobar Basin has historically been under-explored due to high costs and technical challenges. The lack of quality seismic data has hindered sustained interest from operators, resulting in only a few exploration wells being drilled in recent decades. The announcement of this discovery could validate the hydrocarbon potential of this deepwater region, encouraging further investments and exploration that would likely lead to the development of offshore infrastructure like production platforms and pipelines.
While the newfound reserves could significantly contribute to India’s domestic gas supply, the economic viability of the basin hinges on factors such as the size of the reserves, development speed, and environmental management. As India grapples with declining domestic production, new gas discoveries are crucial for enhancing energy security and supporting economic growth.
Natural gas serves as a cleaner alternative to coal in power generation, aligning with India’s climate goals. The establishment of deepwater potential, coupled with appropriate fiscal terms, could stimulate investment from international oil companies (IOCs) and promote the development of new technologies and infrastructure in the sector.
Future Prospects and Strategic Importance
The discovery in the Andaman Basin may not only provide a strategic buffer for India but also enhance its negotiating power in global energy markets. The potential for stable domestic gas supplies could support industrial growth and provide a foundation for sustainable energy development.
Interest from IOCs is already growing, evidenced by the memorandum of understanding (MoU) signed in July 2025 between ONGC and BP to collaborate on drilling stratigraphic wells in several Indian offshore sedimentary basins, including the Andaman and Mahanadi. Such partnerships are expected to enhance geological understanding and unlock untapped hydrocarbon potential, thereby strengthening India’s long-term energy security.
However, for IOCs to engage actively in exploring India’s frontier basins, significant improvements in regulatory frameworks and transparency in data sharing are necessary. Until these changes are implemented, national oil companies like ONGC and Oil India will remain vital partners in securing the country’s hydrocarbon future. As exploration efforts continue, the Andaman gas discovery could catalyze further foreign investments and technological advancements in India’s energy sector.
Overall, while the Andaman-Nicobar Basin holds promise, its development will require careful management of environmental risks and a commitment to sustainable practices. The future of India’s energy landscape may depend significantly on how this newfound resource is harnessed.
