Government Amends Petroleum And Natural Gas Rules
The Government of India amended the Petroleum and Natural Gas Rules, 2025, to boost ease of doing business as well as strengthening exploration and production infrastructure.
The new rules replace the earlier system of multiple licenses with a single petroleum lease that broadens the spectrum of rights to cover exploration, development and production of all hydrocarbons, including shale. The new rules also allow the lessees to undertake decarbonization and comprehensive energy projects at their oilfields.
For ease of administration and to bring uniformity, lease formats have been introduced. There is also a provision for a special petroleum lease
Under the new rules, the time period for deciding the granting of petroleum lease has been reduced to a maximum of 180 days. Even the term of leases has been extended to as much as 30 years, which can be extended up to the economic life of the lease so that lessees can make a planned investment decision.
The new rules also call for companies to make annual declarations of installed, utilised and excess capacities that they hold to the government annually. They can also develop the infrastructure held by them or develop it jointly by reaching an agreement with other entities. The holders of petroleum leases are also required to notify all existing and new discoveries, submit field development plans, obtain Central Government’s approval for developing the areas in a timely fashion. They are also required to report all their developing and production activities in a similar manner.
Addressing environmental concerns, the new rules make it compulsory for lessees to submit a time-bound plan for reduction of targets and well defined milestones for achieving zero gas flaring and reduction of greenhouse gases.
The Oil Industry Safety Directorate has been designated as the competent authority for offshore safety, audits and standard-setting in exploration and production operations.
In case of arbitration, the new rules specify that the seat of arbitration for companies that are incorporated in India is in Delhi, while that for foreign companies, a neutral seat of arbitration may be opted for. Criminal penalties for violations have been removed and replaced with higher financial penalties of Rs 25 lakh, plus Rs 10 lakh per day for continuing breaches.
Petroleum Minister Hardeep Puri lauded the notification of new rules, saying that the new rules have been amended to offer ease of business and operations. He said that India continues to strengthen the infrastructure for domestic exploration and production of hydrocarbons as it moves towards achieving energy security under the dynamic leadership of PM Narendra Modi.
