India's Crude Oil Output Falls for Third Straight Year

India's crude oil production declined for the third consecutive fiscal year in 2025/2026, the government announced as it launched a campaign to expand offshore oil and gas exploration. According to Oil and Natural Gas Minister Hardeep Singh Puri, domestic crude output dropped by 3% during the fiscal year that ended on March 31, 2026.

The government attributed this decline to the natural depletion of mature and aging oil and gas fields. State-owned Oil and Natural Gas Corporation (ONGC), India's largest explorer, managed to limit the annual drop to around 2% through Enhanced Oil Recovery (EOR) and Improved Oil Recovery (IOR) techniques. However, India seeks to increase offshore oil and gas exploration to raise production and lessen its reliance on imports, which can reach up to 90% for crude oil.

The federal government introduced the National Offshore Exploration Scheme last month, allocating $8.8 billion in government support for the fiscal year ending March 31, 2031. This scheme, the most ambitious offshore exploration initiative yet, aims to support up to 50% of the cost of drilling deepwater exploration wells, thereby reducing exploration risk, attracting investment, and accelerating the development of India's offshore hydrocarbon potential.

Key offshore basins with great future hydrocarbon potential include the Krishna-Godavari, Cauvery, Mahanadi, and the Andaman region. These frontier areas demand advanced technology and substantial investment, with a single deepwater exploratory well costing between $125–150 million. To mitigate high-risk, high-cost exploration, the government employs a risk-sharing approach to encourage sustained investment, hasten exploration, and unlock India's offshore hydrocarbon resources.

Strengthening energy security, India also aims to construct new storage sites, as the country, the world's third-largest crude oil importer, strives to fortify its resilience against supply shocks.