Pathbreaking Reforms In Petroleum & Natural Gas Sector: Draft PNG Rules 2025 Unveiled

In a major push to modernise India’s upstream oil and gas regulatory framework, the Ministry of Petroleum and Natural Gas has released the Draft Petroleum & Natural Gas Rules, 2025. The proposed rules introduce a series of pathbreaking reforms aimed at enhancing ease of doing business, attracting investment, and aligning with India’s energy transition goals.

Union Minister Hardeep Singh Puri described the initiative as a key milestone under the leadership of Prime Minister Shri Narendra Modi. “We are bringing in a series of pathbreaking policy reforms to promote exploration and production. These reforms will significantly enhance the ease of doing business for our E&P operators,” he said.

The Ministry has invited industry leaders, experts, and citizens to submit their feedback on the Draft Rules, the revised Model Revenue Sharing Contract (MRSC), and the updated Petroleum Lease format by 17th July 2025 via email at png-rules@dghindia.gov.in. The consultation process will culminate at Urja Varta 2025 at Bharat Mandapam, New Delhi, on the same day.

Key Reforms in the Draft PNG Rules 2025:

• Investor Protection Clause: Introduction of a stabilisation clause to shield investors from adverse future legal or fiscal changes (e.g., hikes in taxes or royalties), with provisions for compensation or deductions.

• Infrastructure Sharing: Mandatory declaration of underutilised pipeline and facility capacity, enabling third-party access on fair terms to avoid infrastructure duplication and support smaller players.

• Low-Carbon Projects in Oilfields: For the first time, operators will be permitted to undertake renewable and low-carbon energy projects—such as solar, wind, hydrogen, and geothermal—within oilfield blocks, subject to safety norms.

• Environmental Oversight: New mandates include greenhouse gas emissions monitoring, a regulatory framework for carbon capture and storage (CCS), and site restoration funds with post-closure monitoring for at least five years.

• Data Governance: All data and physical samples from exploration and production activities will be the property of the Government of India. External usage requires prior approval, with confidentiality maintained for up to seven years.

• Adjudicating Authority: Establishment of a dedicated authority (rank of Joint Secretary or above) to resolve disputes, enforce compliance, and impose penalties.

• Operational Flexibility: Clear provisions on lease mergers, extensions, and unitisation of reservoirs spanning multiple blocks to enhance operational efficiency.

These reforms mark the replacement of the outdated Petroleum Concession Rules, 1949 and Petroleum and Natural Gas Rules, 1959, following recent amendments to the Oilfields (Regulation and Development) Act, 1948. The timing of these announcements is strategic, ahead of OALP Round X, India’s largest exploration and production bidding round to date.

Aligned Policy Instruments:

The Ministry has also released:

• A revised Model Revenue Sharing Contract, aligning with the updated rules on unitisation, lease mergers, and infrastructure sharing.

• An updated Petroleum Lease format detailing clearer processes for lease relinquishment, reservoir extension, and termination triggers.

Minister Puri remarked, “It has never been easier, faster and more profitable to explore oil & gas in India. We look forward to constructive engagement to shape a modern, investor-friendly regime.”

Stakeholders are encouraged to actively contribute their feedback by the deadline to help shape the future of India’s hydrocarbon sector.