Why in news?
India’s Ministry of Petroleum and Natural Gas released draft rules in July 2025 to overhaul the decades‑old regulatory framework governing the upstream oil and gas sector. Stakeholders have been invited to provide feedback.
Why reforms are needed
- Existing statutes— the Oilfields (Regulation and Development) Act 1948 and Mineral Concession Rules 1949—are outdated and ill‑suited to modern exploration challenges.
- India plans to increase domestic hydrocarbon production to reduce import dependence, while simultaneously aligning with its net‑zero commitments.
- Unused pipeline capacity and complex licensing deter private investment; new rules aim to improve ease of doing business ahead of the next Open Acreage Licensing round.
Key provisions
- Stabilisation clause: Protects licensees from sudden increases in royalties or taxes during the contract period, providing fiscal certainty.
- Third‑party access: Under‑utilised pipelines must offer non‑discriminatory access to third parties, improving infrastructure efficiency.
- Renewable integration: Allows licensees to set up solar, wind or hydrogen projects within oilfields to decarbonise operations.
- Environmental safeguards: Mandates greenhouse‑gas monitoring and encourages carbon capture and storage. Gas flaring must be minimised.
- Data governance: All exploration data generated belongs to the government; clear provisions govern data sharing, protection and commercial use.
- Adjudication mechanism: Establishes a tribunal for resolving disputes between the regulator and licensees, reducing litigation delays.
- Contractual reforms: Simplifies revenue‑sharing models, provides longer lease terms and clarifies relinquishment obligations.
Implications
- The rules could attract more private and foreign investment by providing clarity and stability.
- Integration of renewables and stricter environmental norms align the fossil‑fuel sector with India’s net‑zero ambitions.
- Transparent data governance and third‑party access to pipelines may foster a more competitive market.
- Stakeholder feedback will be crucial in balancing investor confidence with energy security and environmental protection.