Page 42 - Policy Economic Report - December 2025

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

According to him, India has also strengthened its energy security by diversifying sources of crude oil
imports. The country now procures crude oil from around 40 nations and has long-term gas supply
agreements with 15 countries. In the upstream sector, the government has opened more than one million
square kilometres for oil and gas exploration.

The consultative committee appreciated progress made in the country’s energy transition initiatives,
including achieving 19.24 per cent ethanol blending, commissioning 170 compressed biogas plants, setting
up green hydrogen projects by public sector undertakings, and the production of India’s first ISCC CORSIA-
certified sustainable aviation fuel by Indian Oil Corporation.

“These steps reflect India’s commitment to building an energy sector that is affordable, sustainable and
self-reliant,” Puri said.

Government Enhanced Natural Gas Availability to Support Power Generation

Government have taken various measures to enhance the availability of natural gas for power generation
which, inter-alia, includes expansion of National Gas Grid to connect domestic gas sources as well as
Liquefied Natural Gas (LNG) terminals to the power plants, introducing a unified tariff, setting up of LNG
Terminals, allowing the domestic gas producers who have been granted pricing and marketing freedom
to sell domestic gas up to 500 mmscm or 10% of annual production from their contract area whichever is
higher, per year through gas exchanges authorized by PNGRB, etc.

Further, Government have placed Liquefied Natural Gas (LNG) under the Open General Licence (OGL)
category. This allows buyers to freely import LNG as per their requirement on mutually agreed commercial
terms with suppliers. Government have also made provisions for Nil customs duty on import of LNG, if it
is used for generation of electricity by a generating company as defined in section 2(28) of Electricity Act,
2003 (36 of 2003) to supply electrical energy or to engage in the business of supplying electrical energy to
the grid. Gas based power plants are free to import the LNG, generate power and sell it to customers.

Government have taken multiple steps to increase share of Natural Gas in primary energy mix.
These, inter-alia, includes expansion of National Gas Grid Pipeline, expansion of City Gas Distribution
(CGD) network, setting up of Liquefied Natural Gas (LNG) Terminals, allocation of domestic gas to
Compressed Natural Gas (Transport) / Piped Natural Gas (Domestic) CNG(T)/PNG(D) as priority sector,
allowing marketing and pricing freedom with a ceiling price to gas produced from high pressure/high
temperature areas, deep water & ultra-deep water and from coal seams, Sustainable Alternative Towards
Affordable Transportation (SATAT) initiatives to promote CBG etc..

For increasing domestic gas production, Government of India has notified Hydrocarbon Exploration and
Licensing Policy (HELP) for the award of exploration acreages shifting from Production Sharing mechanism
to Revenue Sharing mechanism. Government further notified policy framework for early monetization of
Coal Bed Methane (CBM) (2017), Discovered Small Field policy (2018), policy reforms in 2019, where
many of the processes and approvals were relaxed to promote “Ease of Doing Business”, Revenue Share
from Category II & III type of basins were removed, except for windfall gains, 7 years Royalty Holiday for
Deep & Ultra-deep blocks, concessional Royalty Rates for Deepwater and for ultra-deep water blocks, and

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