By R. Sasankan

India has an ever-widening maw for energy imports. That makes it a very attractive market for oil and natural gas producers. There is very good reason for this: India is the third largest importer of crude oil in the world, and imports close to 88 per cent of its crude oil needs. It also ranks as the second largest importer of LPG importing 60% of its demand, and the fourth largest importer of LNG trailing only China, Japan, and South Korea. The country imports approximately 22 to 25 million metric tonnes (MMT) of LNG annually, which helps meet about half of its total natural gas consumption.

But here is the paradox: India also has very large sedimentary basins that contain hydrocarbon deposits though not in significant quantities. But it has been wrestling with the challenge of finding sufficiently large reserves of oil and gas that would make its extraction commercially viable.

The hunt for oil and gas is always fraught with risks. One can liken the quest for oil to a game of shooting darts in the dark. Professionally managed E&P companies try to mitigate the risk by carrying out extensive seismic and geological surveys and then learn to limit exploration to those areas that geologists identify as prospective fields. The prognostications made by the so-called experts can go horribly wrong as many tend to blithely drum up their projections.

Blame it all on the shenanigans of dishonest professionals. I have covered the oil sector since 1981 and have seen at close quarters how these experts have persuaded oil companies into committing enormous amounts of money to reckless misadventures. The state-owned E&P companies are run today by professionally competent people. But success has eluded them largely because they have inherited a system that cannot be restored to health without drastic surgery.

Let me just cite a few statistics to buttress my argument. Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) are the two major state-owned upstream companies in the country. There was a period in the mid-1980s when domestic production could meet almost 80 per cent of the country's demand for crude oil. A bunch of inept executives drew up plans to flog the Bombay High field through an ill-advised accelerated production programme that precipitated serious problems leading to a sharp decline in its yield.

Over the last five years, ONGC's cumulative capital expenditure for exploration and production (E&P), which includes extensive seismic surveys and drilling costs, stood at approximately $18 billion (Rs 1500 billion). In a bid to intensify exploratory drilling, ONGC committed in FY 2021-23 to an exploration budget of Rs 310 billion, which was 150% higher than the preceding three-year block. ONGC has outlined an active target of up to Rs 120 billion, for standalone exploration Capex in its deepwater expansion, partnering with global energy majors. ONGC and Oil India Ltd (OIL) also launched a massive Rs 32 billion offshore drilling drive in untapped Indian deep-sea sedimentary basins (like the Andaman and Mahanadi basins.

In one sense, ONGC has been locked into an exhausting Sisyphean cycle of immense effort and repeated failure in its search for oil.

ONGC operates a total of around 203 rigs, which includes 113 primary drilling rigs and approximately 90 work-over rigs. Across its total fleet ecosystem, the company operates a total of roughly 230 units when including all specialized and minor support structures.

Over the last five years, ONGC drilled a total of 2,635 wells. This includes a robust mix of exploratory and development wells. Oil India drilled a total of 294 wells over the last five financial years (FY 2021-22 through FY 2025-26).

Despite its best efforts, ONGC has had to contend with a steady decline in oil production and a frustrating absence of major discoveries. In FY 2025-26, ONGC's standalone crude oil production stood at roughly 19.8 Million Metric Tonnes (MMT). Oil India achieved a crude oil production of roughly 3.45 to 3.5 Million Metric Tonnes (MMT) for the full financial year 2025-26.

This obviously raises a question: Can the country afford to continue making such huge investments without any sign of enhanced domestic production? At the same time, the lifting cost of oil has reached $ 45 a barrel in the case of ONGC. I am not disputing the fact that there have been some discoveries. But more than 99 per cent of them have been either very small or marginal fields that it has not been able to put into production.

Can the country persist with this reckless drilling exercise? How many oil companies in the world own 203 rigs? ONGC cannot keep its rigs idle and, therefore, must continue to frantically drill for oil even if that results in an alarming count of dud wells.

Someone is clearly inventing prospectivity to justify drilling. Recently, I met a genuine oil expert who was once in the now-defunct Planning Commission in charge of the energy sector. He said the lifting cost of crude had already touched $ 40 a barrel when he was in the Planning Commission because of wasteful expenditure. "The physical surveys and drilling are all fictitious and just used to siphon off funds," he says.

There is a crisis in leadership of India's oil sector. It is evident that the political bigwigs need to step in to put things in order. As a first step, they need to order a comprehensive survey of the sedimentary basins to establish the true prospectivity of its fields before committing more funds and chasing a mirage.