The government has officially announced the new Petroleum and Natural Gas Rules, 2025, marking a significant step towards modernizing the regulatory landscape and fostering increased investment and ease of doing business within the oil and gas sector. These rules, stemming from the recently sanctioned Oilfields (Regulation and Development) Amendment Act, 2025, replace the previous system of multiple licenses with a single, comprehensive petroleum lease encompassing exploration, development, and production of all hydrocarbons, including shale resources.

Key Features:

• Single Petroleum Lease: The new rules replace the previous system of multiple licenses with a single petroleum lease, granting lessees broader rights to carry out all types of mineral oil operations, including decarbonization and integrated energy projects, without requiring separate permissions.
• Extended Lease Durations: Leases can now be granted for up to 30 years, with the possibility of extending them for the entire economic life of the field. This allows potential lessees to make well-informed investment decisions with a longer-term perspective.
• Streamlined Approvals: A mandatory decision timeline of 180 days has been introduced for processing petroleum lease applications, ensuring faster approvals.
• Infrastructure Sharing: The rules permit lessees to jointly develop or share infrastructure facilities by mutual agreement, promoting operational efficiency and reducing redundancy. Lessees are required to submit annual reports on their infrastructure capacities, and the rules encourage collaborative development of infrastructure among operators.
• Dispute Resolution: The amendments specify that New Delhi will be the seat of arbitration for disputes involving only Indian companies, while contracts with foreign entities may opt for a neutral seat.
• Environmental Provisions: Environmental provisions mandate time-bound plans for zero gas flaring and reduced greenhouse gas emissions, aligning with global sustainability standards.
• Enhanced Penalties: Criminal penalties have been removed, but financial penalties for violations have been significantly increased to ₹25 lakh, with continuing contraventions attracting ₹10 lakh per day.
• Offshore Safety: The Oil Industry Safety Directorate has been designated as the competent authority for offshore safety, audits, and standard-setting in exploration and production operations.

Benefits:

• Increased Investment: By streamlining regulations and offering longer lease durations, the new rules are expected to attract greater investment in the exploration and production (E&P) sector.
• Ease of Doing Business: The single petroleum lease and faster approval timelines will significantly improve the ease of doing business for companies operating in the oil and gas sector.
• Energy Security: The reforms aim to strengthen India's energy security by boosting domestic exploration and production of hydrocarbons, reducing dependence on imports.
• Sustainable Practices: The environmental provisions and focus on decarbonization will promote more sustainable practices in the oil and gas sector, aligning with global efforts to reduce greenhouse gas emissions.
• Efficient Operations: Allowing lessees to share infrastructure and promoting collaborative development will lead to more efficient operations and reduced costs.

Target:

The primary target of these new rules is to accelerate domestic exploration and production activities. By creating a more favorable regulatory environment, the government aims to unlock India's vast untapped hydrocarbon potential, enhance energy security, and promote sustainable practices in the oil and gas sector. The reforms are expected to benefit both domestic and foreign companies, encouraging them to invest in India's E&P sector and contribute to the country's growing energy needs.

Union Minister for Petroleum and Natural Gas, Hardeep Singh Puri, stated that the amendments offer ease of business and operations, enabling lessees to carry out all types of mineral oil operations under a single petroleum lease and undertake decarbonization and comprehensive energy projects at oilfields. He also emphasized India's commitment to strengthening infrastructure for domestic exploration and production as the country moves towards achieving energy security. These changes reflect India's commitment to boosting energy security and promoting sustainable practices. By simplifying lease processes, introducing strict compliance norms, and encouraging decarbonisation, the government aims to create a robust and future-ready energy ecosystem.