New Delhi: The Ministry of Petroleum and Natural Gas has notified the Petroleum and Natural Gas Rules, 2025, superseding the Petroleum Concession Rules of 1949 and the Petroleum and Natural Gas Rules of 1959, according to a notification published on Thursday. The rules, issued under the Oilfields (Regulation and Development) Act, 1948, come into force from the date of publication and establish the overarching procedure for granting, extending and regulating petroleum leases, alongside new provisions on emissions, data ownership, infrastructure sharing and dispute resolution.
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The 2025 framework creates a single petroleum lease covering the entire spectrum of mineral oil operations, including exploration, development, production and, for the first time, the ability to undertake comprehensive energy projects such as renewables and hydrogen development within oilfields. The rules mandate that applications for a petroleum lease be decided within 180 days of filing complete information, with deemed approval in areas under central jurisdiction if no decision is conveyed within that period. The initial term of a lease may range from four to 30 years, and extensions may run up to the economic life of the field.
Minister for Petroleum and Natural Gas Hardeep Singh Puri described the notification as a “landmark moment” in a post on X, stating that the revised rules “offer ease of business and operations” and help strengthen domestic exploration and production infrastructure “as we move ahead towards achieving energy security under the dynamic leadership of PM Shri @narendramodi Ji.” He said the broader spectrum of rights under a single lease would allow lessees to carry out all mineral oil operations under one instrument and simultaneously undertake decarbonisation and comprehensive energy projects.
The rules introduce statutory obligations for greenhouse gas monitoring and reduction, requiring each lessee to submit a detailed plan within 180 days of the rules coming into effect or alongside the field development plan. The plan must outline emission sources, measurement methodology, equipment to be used, time-bound reduction targets, and milestones to achieve zero gas flaring. Monthly flaring is capped at 0.5 per cent of field production, and any exceedance must be reported within 24 hours. Monthly reporting of gas produced and flared, and an annual report detailing actions taken against the emission reduction plan, are mandatory. Operators may also be required to undergo third-party verification of metering or reporting. Provisions for geological sequestration have been established, starting with an authorisation for feasibility assessment, followed by a two-year injection permit for pilot tests and a subsequent storage permit for long-term sequestration, subject to environmental and disaster management plans.
Puri noted that the rules now require a formal reduction plan with time-bound targets and clear milestones aimed at eliminating routine flaring and reducing greenhouse gas emissions.
All data generated from mineral oil operations will belong to the Central government. Lessees must submit data in prescribed formats and may retain copies solely for their own operations and research. The government may use the data for national planning, policy development, environmental assessment, scientific research and investment promotion, and may share it with academic and research bodies or investors on terms it considers appropriate. Proprietary data explicitly identified as such by the lessee will be kept confidential for seven years unless disclosure is required by law, although the government retains a worldwide, perpetual right to use such data for specified public-interest purposes.
The rules introduce tighter procedures for relinquishing leased areas and for managing reservoirs extending across multiple lease boundaries. Lessees must notify the Centre and relevant state governments when reservoirs extend beyond their lease area and may be required to cooperate with adjoining lessees on joint development programmes. Relinquishment of non-producing areas requires a 90-day notice and producing areas require a 180-day notice. If a lease is cancelled, the outgoing lessee may be required to cooperate for up to one year to ensure continuity of operations until the government or its nominated entity takes over.
Lessees must annually declare the installed, utilised and excess capacity of infrastructure used in mineral oil operations. Joint development or sharing of infrastructure may be undertaken by mutual agreement. If parties fail to agree, the Centre may determine the extent of excess capacity and prescribe the conditions and tariffs for shared use after a hearing. Standardised lease formats have also been introduced “for uniformity and ease of administration,” the minister said.
Dispute resolution provisions specify that arbitration will be seated in New Delhi when all lessees are Indian companies. Where any party is a foreign company, a neutral seat of arbitration may be chosen. Penalty-related matters, mediated disputes and matters involving third-party rights, such as compensation for environmental damage or bodily injury, are designated non-arbitrable.
Special provisions apply to national oil companies operating in nomination blocks. Existing discoveries must be notified within 30 days of commencement of the rules, and field development plans must be submitted within one year. Areas held on nomination basis will stand relinquished two years after commencement of the rules except for discoveries notified within the stipulated window, development areas approved by the government and locations where production is ongoing.
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Puri also stated that penalties have been enhanced, with fines now set at Rs 25 lakh for contraventions of the rules and an additional Rs 10 lakh per day for continuing violations.