Oil India Ltd has reported the presence of natural gas in its third exploratory well in the Andaman offshore basin, strengthening hopes that the region could emerge as an important hydrocarbon-producing area for India.
The company informed stock exchanges on Friday that natural gas was encountered in the Vijayapuram-3 exploratory well in the Andaman Shallow Offshore Block AN-OSHP-2018/1. The discovery marks the second hydrocarbon find from the company’s ongoing exploration campaign in the block.
In a separate exchange filing, Oil India said preliminary assessment of the latest well indicates hydrocarbon accumulation potential, providing fresh encouragement for future exploration activities in the region.
The development comes at a time when India is looking to reduce its dependence on imported crude oil and natural gas by increasing domestic production.
The Vijayapuram-3 well is located around 15 kilometres off the east coast of the Andaman Islands and was drilled at a water depth of 355 metres under the Open Acreage Licensing Policy (OALP). According to the company, initial production testing in the Eocene formation at a depth of more than 1,900 metres confirmed the presence of natural gas through continuous flaring.
Oil India said the well showed immediate pressure build-up after perforation and started producing gas, indicating the presence of a functioning hydrocarbon system.
The company is now carrying out gas sampling to determine the composition and calorific value of the gas. Isotope studies are also underway to understand its origin.
While commercial viability is yet to be established, the discovery is significant because it adds to evidence that hydrocarbons are present in the Andaman offshore basin.
According to Oil India, the findings indicate the possible presence of hydrocarbon source systems, migration pathways and accumulations in the prospect area.
In simple terms, the discovery suggests that the geological conditions required for oil and gas accumulation exist in the region, increasing the chances of future finds.
The latest discovery follows the presence of natural gas in the Vijayapuram-2 exploratory well, which was reported in September 2025. With the latest result, hydrocarbons have now been encountered in two out of the three exploratory wells drilled in the block so far.
Following the earlier gas discovery, Oil India had already launched an appraisal programme aimed at better understanding the resource potential of the block.
The company reprocessed existing 2D seismic data and acquired an additional 600 square kilometres of 3D seismic data in the area. Processing and interpretation of this data is currently underway.
Once the analysis is completed, the company is expected to begin appraisal drilling to determine the size, quality and commercial viability of the reserves.
The latest findings are likely to help guide those future drilling plans.
The Andaman offshore basin has attracted growing interest in recent years due to its geological similarities with several hydrocarbon-rich regions in Southeast Asia.
Energy companies and policymakers have increasingly viewed the basin as a potentially important frontier area for oil and gas exploration.
Although discoveries alone do not guarantee commercial production, repeated hydrocarbon encounters improve confidence in the basin’s long-term potential.
For India, successful development of domestic gas resources could help improve energy security and reduce dependence on imports.
Oil India said it will continue to keep stakeholders informed as exploration activities progress in the Andaman offshore basin.
Shares of Oil India were trading nearly flat at Rs 488.95 on Friday, though the stock has gained more than 14% so far this year.