India’s oil and gas sector is undergoing a significant change. As one of the world’s fastest-growing major economies, the country’s energy demand continues to rise due to industrial growth, urbanization, and expanding transportation needs. However, domestic production has not kept pace, resulting in high import dependence. To address this, the government is focused on boosting domestic exploration and production, while also updating the legal and policy framework to attract foreign investment and technical expertise.
A key development in this effort is the Oilfields (Regulation and Development) Amendment Act, 2025 (‘Oilfields Amendment Act’), which came into force on 15 April 2025 and introduces a more streamlined, centralized, and investor-oriented regulatory structure. The said Act aims to bring India’s upstream oil and gas regulations closer to international standards and improve the overall ease of doing business for global investors.
India’s oil and gas industry presents significant opportunities for foreign investors, particularly in the light of its rising energy demand. Despite being one of the fastest-growing economies, India’s domestic crude oil production falls short of meeting its consumption needs. This gap creates a compelling market for investment in exploration, production, and infrastructure. The government’s ongoing efforts to increase refining capacity and improve natural gas utilization further enhance the investment landscape. For instance, India is aiming to increase its refining capacity to 310 million tonnes per annum by 2028, with major projects like the West Coast Refinery – a collaboration with Saudi Arabia, already in progress. This expansion is creating demand for technology solutions, particularly in areas like refinery upgrades, emission control, and clean fuel development—areas where foreign expertise is critical.
As a result, foreign investors with sector-specific expertise in these areas will find a favourable policy environment designed to facilitate large-scale, technology-driven investments.
Key legal reforms under the Oilfields Amendment Act
The Oilfields Amendment Act proposes to bring about fundamental changes aimed at simplifying processes, protecting investors, and promoting sustainable energy development.
1. Transition to ‘Petroleum Leases’: The Oilfields Amendment Act replaces the outdated concept of ‘mining leases’ (as defined under the Oilfields Act, 1948) with ‘petroleum leases’, clearly encompassing the full spectrum of oil and gas activities—exploration, production, and transportation. This change brings India’s legal terminology in line with global upstream practices.
2. Centralized Regulatory Authority: The central government is now exclusively empowered to regulate and grant petroleum leases. This move significantly reduces jurisdictional overlap and red tape at the state level, offering a single-window mechanism for licensing—highly attractive for foreign investors seeking predictability and consistency.
3. Enhanced Investor Protection: The Oilfields Amendment Act ensures that existing lease agreements will not be altered to the lessee’s disadvantage. This provision enhances contractual sanctity and provides reassurance for foreign investors planning long-term capital deployment.
4. Decriminalisation of offences: Violations of regulatory provisions now attract monetary fines instead of imprisonment—up to INR 25 lakh, with an additional INR 10 lakh per day for ongoing violations. This alters the very nature of offences without any threat of imprisonment.
5. Formal Dispute Adjudication Framework: The Central Government is authorized to appoint a senior officer (Joint Secretary or above) as the Adjudicating Authority, with appeals routed through the Appellate Tribunal under the Petroleum and Natural Gas Regulatory Board Act, 2006.
For international energy companies—particularly those from hydrocarbon-rich regions such as the Middle East, North America, and Europe—these reforms significantly reduce the legal and operational friction typically associated with entering emerging markets. The centralized lease model defined regulatory pathways, and decriminalisation of offences regime make India a more bankable and transparent jurisdiction for upstream investment.
The Oilfields Amendment Act also complements existing investor-oriented frameworks in India that aim to attract private and foreign participation in India’s upstream oil and gas sector such as:
* The Hydrocarbon Exploration and Licensing Policy (HELP), which offers unified licensing and revenue-sharing contracts.
* The Open Acreage Licensing Policy (OALP), allowing investors to bid on exploration blocks year-round.
* The Discovered Small Fields (DSF) Scheme, which allows for the commercial development of marginal or previously uneconomical oilfields.
Together, these initiatives represent a legal and economic environment where foreign players with domain expertise can operate with greater certainty, reduced entry barriers, and more responsive governance.
Additionally, the Oilfields Amendment Act also addresses renewable energy deployment within oilfield operations, enabling oil and gas companies to align with India’s broader energy transition goals. This provision ties into initiatives such as the National Green Hydrogen Mission, which targets the production of 5 million metric tonnes of green hydrogen by 2030. Therefore, for foreign investors who are active in clean energy or with capabilities in carbon capture, hydrogen, or biofuels, this opens opportunities for integrated energy models that combine conventional operations with sustainable energy innovation.
Way forward
India’s growing energy appetite, combined with robust legal reforms and a transparent licensing regime, makes it one of the most promising destinations for global investment in the oil and gas sector. For foreign investors—particularly those offering specialized expertise, cutting-edge technology, and long-term capital—this is an ideal time to enter the Indian energy landscape. Whether in exploration, refining, natural gas, or renewable integration, the Indian market offers not only scale and opportunity but also a supportive, legally secure environment designed for strategic partnership and sustainable growth.
[The authors are Partner and Associate, respectively, in Corporate and M&A practice at Lakshmikumaran & Sridharan Attorneys, Hyderabad]
