India’s New Oilfield Law: A Major Shift in Energy Exploration and Investment

The Indian government has taken a significant step toward reforming the country’s oil and gas sector with the passage of the Oilfield (Regulatory and Development) Amendment Bill, 2024. Passed by the Lok Sabha on March 12, 2025, and earlier approved by the Rajya Sabha in December 2024, the bill aims to simplify regulations, attract investment, and promote domestic oil and gas exploration. With India being one of the world’s largest energy consumers, these reforms are crucial for reducing dependence on imports and ensuring energy security.

What is the Oilfield Regulation Bill?

The Oilfield (Regulatory and Development) Amendment Bill, 2024, seeks to modernize India’s regulatory framework for oil and gas exploration and production. The key highlights of the bill include:

• Replacing multiple permits with a single petroleum lease to reduce bureaucratic delays.
• Delinking petroleum operations from mining regulations for more focused governance.
• Encouraging infrastructure sharing to help small operators develop untapped reserves.
• Strengthening penalties and regulatory oversight to ensure compliance.
• Introducing faster dispute resolution mechanisms to boost investor confidence.

Investor-Friendly Measures

The Indian government has emphasized that the amendments will create a more predictable legal framework, fostering confidence among domestic and global investors. The transition from a production-sharing model to a revenue-sharing model is a crucial step that allows companies to focus on maximizing output rather than engaging in complex cost recovery calculations. The bill also guarantees stability in lease tenures and provides legal clarity to investors.

Who Regulates Oil and Gas in India?

The oil and gas sector in India is regulated by multiple authorities, including:

• Ministry of Petroleum and Natural Gas (MoPNG): Oversees policy formulation and administration.
• Directorate General of Hydrocarbons (DGH): Regulates exploration and production activities.
• Petroleum and Natural Gas Regulatory Board (PNGRB): Manages midstream and downstream activities, including refining, transportation, and distribution.

The new amendments aim to streamline regulatory processes by reducing red tape and improving coordination among these agencies.

What is the Standard Oil Act?

The Standard Oil Act refers to the Sherman Antitrust Act of 1890, which led to the breakup of Standard Oil in 1911. Standard Oil, founded by John D. Rockefeller, was a monopoly that controlled the U.S. oil industry. The act was one of the first major pieces of antitrust legislation designed to prevent monopolies and promote fair competition. Although it primarily affected the U.S., its principles have influenced global regulatory frameworks, including India’s approach to ensuring fair competition in the oil sector.

Latest Amendment to the Petroleum Act

The Petroleum Act, 1934, which governs the import, transport, storage, and distribution of petroleum in India, has undergone multiple amendments. The latest amendment focuses on:

• Revising the definition of ‘mineral oil’ to include all types of hydrocarbons.
• Enhancing penalties for violations, with fines reaching up to ₹25 lakh and additional daily penalties for continued infractions.
• Promoting alternative dispute resolution mechanisms for faster and cost-effective conflict resolution.

These amendments align with India’s broader push for energy security and regulatory efficiency.

Who Owns Oil in India?

In India, oil and gas resources are primarily owned by the Government of India, which leases exploration and production rights to state-owned and private companies. The key players include:

• Public Sector Undertakings (PSUs): Companies like ONGC (Oil and Natural Gas Corporation) and Indian Oil Corporation (IOC) dominate upstream and downstream operations.
• Private Companies: Reliance Industries, Cairn Oil & Gas, and Vedanta are major private players in exploration and refining.
• Foreign Investors: While foreign companies participate in joint ventures, the government maintains regulatory control over the sector.

Three Classifications of Petroleum Oil

Petroleum oil is classified into three main types based on its composition and use:

1. Crude Oil: The unrefined liquid extracted from underground reservoirs, which is processed into fuels and petrochemicals.
2. Refined Petroleum Products: Includes gasoline, diesel, jet fuel, kerosene, and lubricants.
3. Natural Gas Liquids (NGLs): Consists of ethane, propane, butane, and pentane, used in industries and household applications.

Balancing Energy Transition with Fossil Fuel Dependence

Despite global efforts to transition to renewable energy, India recognizes the continued importance of petroleum in its energy mix. The government is promoting electric vehicles, biofuels, and hydrogen energy while simultaneously enhancing domestic oil production to meet rising demand.

India currently consumes around 5.5 million barrels of crude oil per day, projected to increase to 6.5–7 million barrels in the coming years. With over 220 million tonnes of crude oil imported annually, valued at $108 billion, reducing dependence on imports is a strategic priority.

Conclusion

The Oilfield (Regulatory and Development) Amendment Bill, 2024, is a landmark reform aimed at streamlining India’s oil and gas sector. By simplifying licensing, ensuring investor stability, strengthening penalties, and allowing infrastructure sharing, the bill enhances the “Ease of Doing Business” in energy exploration. At the same time, India remains committed to a balanced energy transition, ensuring energy security while embracing cleaner alternatives. With these reforms, the country is poised to attract more investment and strengthen its position in the global energy market.