New Delhi: Union Minister Hardeep Singh Puri has unveiled a comprehensive overhaul of the Petroleum and Natural Gas Rules, introducing the Petroleum and Natural Gas Rules, 2025, set to revolutionize the upstream sector. These reforms aim to modernize the regulatory framework, enhance ease of doing business, attract investment, and align with India's energy transition goals.
The 2025 rules replace the outdated Petroleum Concession Rules, 1949, and Petroleum and Natural Gas Rules, 1959, following amendments to the Oilfields (Regulation and Development) Act, 1948. The new rules came into force following their publication in the Gazette of India on December 9, 2025 and apply to all states and union territories, as well as India's maritime zones.
Puri highlighted the government's commitment to accelerating oil and gas exploration under the leadership of Prime Minister Narendra Modi. He emphasized that these reforms would significantly enhance the ease of doing business for Exploration and Production (E&P) operators.
Key features of the Petroleum and Natural Gas Rules, 2025:
- Extended Lease Durations: Leases can now be granted for up to 30 years, extendable to the economic life of the field, offering potential lessees a longer investment horizon.
- Single Petroleum Lease: Lessees now have the right to conduct all types of mineral oil operations under a single petroleum lease.
- Investor Protection: A stabilization clause protects lessees from adverse impacts of future legal or fiscal changes, such as increases in taxes or royalties, by allowing compensation or deductions.
- Infrastructure Sharing: Lessees must declare underutilized capacities in pipelines and other facilities and provide third-party access on fair terms, subject to government oversight, to reduce infrastructure duplication and encourage smaller players.
- Integration of Renewable Energy: Operators can now undertake integrated renewable and low-carbon projects, including solar, wind, hydrogen, and geothermal, within oilfield blocks, subject to safety norms.
- Environmental Oversight: The rules introduce comprehensive guidelines for greenhouse gas (GHG) monitoring and reporting, establish a legal framework for carbon capture and storage (CCS), and mandate site restoration funds with a minimum five-year post-closure monitoring period.
- Data Governance: All operational data and physical samples belong to the Government of India. Lessees can use this data internally, but any external sharing or export requires government approval, with confidentiality rules in place for up to seven years.
- Streamlined Processes: The rules include streamlined processes for lease mergers, extensions, and unitization of reservoirs across multiple blocks to enhance operational flexibility.
- Dispute Resolution: A dedicated Adjudicating Authority, not below the rank of Joint Secretary, will enforce compliance, resolve disputes, and impose penalties.
- Infrastructure Declaration:Lessee's are required to make annual declarations regarding the installed, utilized, and excess capacity of their infrastructure facilities.
The rules also permit lessees to jointly develop or share infrastructure facilities by mutual agreement. The application process for granting petroleum leases would be decided within 180 days. Penalties for rule contravention have been increased to ₹25 lakh, with an additional ₹10 lakh for each day of continued contravention.
These reforms are strategically timed ahead of OALP Round X, India's largest exploration and production bidding round to date. The Ministry has also released a revised Model Revenue Sharing Contract (MRSC) and an updated Petroleum Lease format to complement the new rules.
