New Delhi: In a bid to modernise its upstream oil and gas framework and boost investor confidence, the Ministry of Petroleum and Natural Gas has proposed a stabilisation clause in the draft Petroleum and Natural Gas Rules, 2025, ensuring that operators are financially protected if future legal or fiscal changes reduce their economic returns. This change, aimed at enhancing predictability in India’s exploration regime, would allow lessees to claim deductions or compensation in the event of adverse changes in tax rates, duties, royalties or other statutory levies.
Alongside this, the draft mandates infrastructure sharing across oil and gas fields. Lessees will be required to declare underutilised capacity in pipelines and facilities, and allow third-party access on fair terms. The government will have the power to assess and enforce such access, a move that could reduce duplication of infrastructure and encourage smaller players to enter the market.
Released by the Directorate General of Hydrocarbons (DGH) on Tuesday, the draft rules replace the outdated Petroleum Concession Rules, 1949 and Petroleum and Natural Gas Rules, 1959. The overhaul comes just months after Parliament amended the Oilfields (Regulation and Development) Act, 1948, and is timed to precede the launch of India’s biggest exploration bidding exercise — 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 legal and contractual frameworks will make exploration in India “easier, faster and more profitable.”
For the first time, the draft rules enable oil and gas lessees to develop comprehensive energy projects—including solar, wind, hydrogen, and geothermal—within oilfield blocks. Operators must submit a development plan outlining how such projects will integrate with ongoing petroleum activities without compromising safety or production.
This is a significant move to align fossil fuel operations with India’s broader energy transition goals.
The draft introduces detailed provisions on environmental protection, including mandatory monitoring of greenhouse gas (GHG) emissions, reporting requirements, and a regulatory framework for carbon sequestration and storage. Lessees will be required to set up site restoration funds and undertake post-closure monitoring for a minimum of five years.
All operational data and physical samples generated through exploration and production will belong to the Government of India. While lessees retain the right to use this data for operations and internal R&D, any export or external use of data requires government approval. The rules define procedures for handling proprietary data, with confidentiality protections lasting up to seven years.
A new Adjudicating Authority, not below the rank of Joint Secretary, will be appointed to enforce the rules, adjudicate violations, and impose penalties. The rules also provide for dispute resolution mechanisms and allow for lease mergers, extensions, and unitisation of reservoirs that span multiple blocks.
The Ministry has also released a revised Model Revenue Sharing Contract and Petroleum Lease format. The revised Petroleum Lease format includes procedural clarity on lease relinquishment, reservoir extension, and cancellation triggers — providing greater operational certainty to lessees. Meanwhile, the Model Revenue Sharing Contract is expected to align closely with the new rules, particularly in areas such as unitisation of overlapping reservoirs, treatment of merged lease areas, and integration of infrastructure-sharing obligations. These updates are designed to ensure that contractual frameworks reflect the expanded operational scope and compliance requirements introduced in the rules.
Stakeholders can submit feedback on all three documents until July 17 by writing to png-rules@dghindia.gov.in. The consultation process is expected to culminate at Urja Varta 2025, a government-industry dialogue event scheduled for July 17 at Bharat Mandapam, New Delhi.
