New Delhi: In an effort to modernise its upstream oil and gas regime and attract greater investment, the Ministry of Petroleum and Natural Gas has proposed a stabilisation clause in the draft Petroleum and Natural Gas Rules, 2025. The clause seeks to protect operators financially in case future legal or fiscal changes negatively affect their economic returns. Lessees would be allowed to claim deductions or compensation if tax rates, royalties, duties or other levies are revised adversely.
The draft rules also mandate infrastructure sharing across oil and gas fields. Lessees must declare unused capacity in pipelines and facilities, and allow third-party access on reasonable terms. The government will be authorised to enforce this access to prevent duplication and encourage smaller firms to participate.
Released by the Directorate General of Hydrocarbons (DGH), the draft replaces the long-outdated Petroleum Concession Rules, 1949 and Petroleum and Natural Gas Rules, 1959. This move follows the recent amendment to the Oilfields (Regulation and Development) Act, 1948 and comes just ahead of the country’s next exploration bidding round — OALP Round X.
In a post on X, Petroleum Minister Hardeep Singh Puri said, “A series of pathbreaking policy reforms are being implemented to promote exploration & production. These changes to increase the ease of doing business for our E&P operators are being made after stakeholder consultation at every level.” He added that the new frameworks would make exploration in India “easier, faster and more profitable.”
The draft allows oil and gas lessees to develop additional energy projects—such as solar, wind, hydrogen, and geothermal—within the same lease area. Lessees are required to submit a development plan to show how the renewable projects would operate alongside petroleum activities without impacting safety or production.
Environmental compliance features prominently in the new rules, which require monitoring of greenhouse gas emissions, detailed reporting, and a framework for carbon capture and storage. Lessees must also create site restoration funds and commit to post-closure monitoring for at least five years.
All data and samples generated during exploration and production will remain the property of the Government of India. While operators can use the data for internal purposes, exporting or sharing it externally will require prior approval. Confidentiality of proprietary data will be protected for up to seven years.
The draft rules also expand legal oversight. A new Adjudicating Authority, not below the rank of Joint Secretary, will be empowered to handle violations and penalties. Provisions are included for dispute resolution, lease mergers, and reservoir unitisation across multiple blocks.
The Ministry has also released updated versions of the Model Revenue Sharing Contract and Petroleum Lease format. These include new procedural provisions for lease relinquishment, reservoir extension, and contract termination. The updates aim to align contractual obligations with the expanded regulatory scope outlined in the draft rules.
Public feedback on the rules, lease format and model contract is open until July 17 via email to png-rules@dghindia.gov.in. The consultation process is set to conclude at Urja Varta 2025, a government-industry event scheduled for July 17 at Bharat Mandapam, New Delhi.
BI Bureau
