Proposed New PNG Regulations Intended to Streamline and Update India's Oil and Gas Upstream Structure
The Indian Ministry of Petroleum and Natural Gas has unveiled the Draft Petroleum and Natural Gas Rules, 2025, a comprehensive set of reforms aimed at modernising the upstream oil and gas framework. These reforms are designed to create a more transparent, investor-friendly, and efficient regulatory environment, thereby accelerating oil and gas exploration and production in India.
The key features of the draft rules include an investor-friendly stabilisation clause, which protects lessees from adverse impacts of future legal or fiscal changes. This provision allows for compensation or deductions if such changes occur during contract tenure, thereby improving investment security and confidence.
To encourage participation by smaller players and reduce duplication of infrastructure, the draft mandates that lessees declare any under-utilized capacity in pipelines and facilities and provide access to third parties on fair terms, subject to government oversight. This promotes efficient use of existing infrastructure and lowers entry barriers.
The draft rules also replace the outdated Petroleum Concession Rules, 1949, and Petroleum and Natural Gas Rules, 1959, aligning with the recently amended Oilfields (Regulation and Development) Act, 1948. The revised Model Revenue Sharing Contract and Petroleum Lease format provide greater operational clarity and certainty for operators, with clearer processes for lease mergers, extensions, and unitisation of reservoirs spanning multiple blocks.
In addition, the draft rules propose the creation of a dedicated Adjudicating Authority to enforce compliance, resolve disputes, and impose penalties. The Adjudicating Authority will be not below the rank of Joint Secretary.
The draft rules also introduce detailed requirements for monitoring and reporting greenhouse gas emissions, and permit operators to undertake integrated renewable and low-carbon projects, including solar, wind, hydrogen, and geothermal energy within oilfield blocks.
The consultation process for the Draft Petroleum and Natural Gas Rules, 2025, will culminate at Urja Varta 2025 on July 17. Stakeholders are invited to provide feedback by this date, which can be sent to [email protected].
These reforms are expected to support India's energy security goals and boost upstream oil and gas activities through improved ease of doing business and regulatory certainty. The draft rules are timed to precede OALP Round X, India's largest-ever exploration and production bidding round.
Overall, the Draft Petroleum and Natural Gas Rules, 2025, aim to modernise India's upstream oil and gas framework with several major reforms, providing a significant boost to the country's energy sector.
- The investment climate in India's oil and gas sector may witness an enhancement due to the inclusion of an investor-friendly stabilization clause in the Draft Petroleum and Natural Gas Rules, 2025, providing compensation or deductions for lessees affected by unfavorable legal or fiscal changes.
- The sports sector could potentially benefit from the Draft Petroleum and Natural Gas Rules, 2025, as the proposed regulations allow operators to integrate renewable and low-carbon projects within oilfield blocks, promoting sustainable energy solutions and potentially reducing reliance on fossil fuels.
- The financial news coverage of the Indian oil and gas sector may highlight the anticipated growth in business opportunities following the implementation of the Draft Petroleum and Natural Gas Rules, 2025, as the reforms aim to create a more transparent and efficient regulatory environment, fostering increased exploration and production activities.
