Page 40 - Policy Economic Report - December 2025

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

and fosters job creation. Within CGD networks, the availability of CNG and PNG promotes cleaner mobility
and domestic energy usage, leading to improved air quality and greater environmental sustainability. Govt
notifies New Petroleum and Natural Gas Rules to boost investment, ease of doing biz

The government has notified the new Petroleum and Natural Gas Rules, 2025, bringing into force a
modern regulatory framework aimed at attracting investment and improving ease of doing business in
the oil and gas sector.

The rules, issued under the recently approved Oilfields (Regulation and Development) Amendment Act,
2025, replace the earlier system of multiple licences with a single petroleum lease covering exploration,
development and production of all hydrocarbons, including shale, according to a gazette notification.

The new framework provides lease tenures of up to 30 years, extendable for the full economic life of a
field, with terms protected from adverse changes. 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.
The rules also allow lessees to share infrastructure to improve operational efficiency.

Environmental provisions have mandated time-bound plans for zero gas flaring and reduced greenhouse
emissions.

Applications for petroleum leases must now be decided within 180 days, and disputes may be resolved
through an expedited mechanism, including a neutral arbitration seat for foreign investors.

The Oil Industry Safety Directorate has been designated as the competent authority for offshore safety,
audits and standard-setting in exploration and production operations.

Commenting on the move, Oil Minister Hardeep Singh Puri said, "In a landmark moment today, the
Petroleum and Natural Gas Rules, 2025, have been amended to offer ease of business and operations".

With a broader spectrum of rights under one petroleum lease, the lessees will have the right to carry out
all types of mineral oil operations under one petroleum lease, he said, adding that they may undertake
decarbonisation and comprehensive energy projects at oilfields.

Application for the grant of a petroleum lease will be decided within 180 days. Long-term leases of up to
30 years may be granted and may be extended up to the economic life of the field, allowing the lessee to
make a planned investment decision.

Lessees will make an annual declaration to the government of the installed, utilised and excess capacity
of the infrastructure facilities owned by it, he said.

The new rules permit lessees to jointly develop or share infrastructure facilities by mutual agreement.

Seat of arbitration of lease and contractual disputes, where all lessees or contractors are companies
incorporated in India, will be New Delhi.

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