India, the biggest contributor to world demand for oil, will bring into effect in an overhaul of its drilling policy.
This comes after more than a year of preparation and will boost the exploration and development of India’s oil and gas sector along with increased participation by foreign drillers, a top government official close to the developments told Business Standard.
Foreign drillers will be insured against any fiscal-policy changes, the bugbear that kept reputed overseas explorers like Exxon, Shell, and Chevron from participating in the country’s first nine drilling rounds, the official said.
It is India’s make or break oil exploration policy to draw in foreign investors, with the government laying out the red carpet to oil majors, an industry official said.
Crude oil production by private players declined by more than half in FY25 as against a record 12 million tonnes in FY14, according to the oil ministry data.
The drilling rules, which elaborate on the recently amended Oilfields (Regulation and Development) Act, 1948, and also embrace renewable energy activities in oil areas, were first announced in April in draft form and then further changed this month based on industry feedback, the official said.
He expects them to be written into the government gazette by the end of the month.
These rules, which replace the outdated Petroleum Concession Rules, 1949, and Petroleum and Natural Gas Rules, 1959, were timed to precede the Open Acreage Licensing Policy (OALP) Round X, India’s largest ever exploration and production bidding round, but they are still in time for drillers to place bids based on them.
The official said that the main problem for India’s petroleum sector, considering that its geology is less lucrative than that of African and Latin American countries, was the frequent changes in tax and incentive policies.
Until now, India has attracted bids only from state-run explorers Oil and Natural Gas Corporation (ONGC) and Oil India, apart from an odd bid or so from BP and Reliance Industries in the country’s ninth round. Chevron, Exxon, Shell and Occidental, among others, stayed away.
Beginning next month, India’s biggest ever drilling-rule changes will see bids from these firms, the official said.
“We have spoken to all of them and tailored the rules to their needs,” the official said.
Petroleum Minister Hardeep Singh Puri said: “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.”
The ministry did not say when the new rules would enter the gazette.
“These developments boost policy clarity and predictability and enhance investor confidence,” said Kapil Garg, managing director, Oilmax Energy & Asian Energy Services, an oilfield services company.
“The new exploration data-sharing policy, which formalises licensing and public release of seismic and well data, will boost fresh exploration interest and reduce risks, and may improve success rates in underexplored basins.”
Energy security
India, the world’s third-biggest oil consumer at 5.5 million barrels a day, imports 90 per cent of its crude oil needs, over half its gas consumption, and over 60 per cent of its liquefied petrol gas demand.
In the last two years India was held hostage to international developments, over which it has no control, a senior trader at a state oil refiner said.
For instance, United States President Donald Trump’s support for a Bill that slaps a 500 per cent import tax on countries that buy Russian oil threatens over 40 per cent of its import of crude oil.
BP, in a consortium with ONGC and Reliance Industries, was the only foreign bidder to win acreage in India’s ninth exploration round.
The government has awarded 144 blocks under the country’s first eight OALP rounds, resulting in commitments of investment worth $3.4 billion and 14 discoveries.
India’s oil production, including condensates, slid over 2 per cent to 28.7 million tons in FY25 from a year earlier; gas output dipped marginally to 36.1 billion cubic metres during the period. But oil use rose by 2 per cent and gas consumption by 6 per cent during the period.
The 10th round will also allow explorers to use the underlying blocks to extract other minerals like critical minerals — something Oil India is already doing in Rajasthan under the new rules.
For the first time, the rules will permit operators to undertake integrated renewable and low-carbon projects — including solar, wind, hydrogen, and geothermal energy — in oilfield blocks if they meet safety standards and do not interfere in petroleum production.
The rules will create an adjudicating authority, an office held by a person not below the rank of joint secretary, empowered to enforce compliance, resolve disputes, and impose penalties, the government official said.
