Centre proposes changes to Petroleum Act, seeks stakeholders' feedback

In the draft Bill, the government proposes to decriminalise licenses breaches, while introducing specific criminal offences and higher penalties for unauthorised activities

The Centre on Wednesday released the draft Petroleum (Amendment) Bill, 2026, for stakeholder and public consultation. The Ministry of Petroleum and Natural Gas has proposed changes to the Act's provisions dealing with offences, penalties and procedure.

 

The proposed amendments seek to decriminalise breaches of licence conditions, while introducing specific criminal offences and higher penalties for unauthorised petroleum activities, fraudulent licensing, damage to petroleum facilities, pilferage and acts that endanger safety.

What is the government proposing?

The draft proposes replacing the existing Section 23 of the Petroleum Act with provisions that distinguish between regulatory violations and more serious offences.

 

The ministry said the move aims to address what it described as the “otherwise generic offence presently under S. 23” of the Act.

  

Under the proposed framework, a breach of the terms and conditions of a petroleum licence would no longer be treated as a criminal offence. Instead, an adjudicating officer authorised by the Centre would examine the breach and could direct the licence holder to take corrective action or impose a civil penalty.

 

The penalty could be up to ₹2.5 crore for the first breach and ₹5 crore for a second or subsequent breach. The officer could also recommend suspension, revocation or curtailment of the licence.

 

The ministry's explanatory note said the proposed Section 23C would “decriminalise breaches of terms and conditions of licenses” and establish a system of civil penalties through administrative adjudication. 

Unauthorised operations to attract criminal penalties

The draft Bill, however, proposed criminal penalties for carrying out a petroleum activity that requires a licence without obtaining one.

 

Under the proposed Section 23(1), such an offence could attract imprisonment of up to three years, a fine of up to ₹25 crore, or both. A continuing violation could attract an additional fine of up to ₹10 lakh for every day that the contravention continues.

 

The provision covers activities such as the production, import, storage, refining, transportation and blending of petroleum or petroleum products where a licence is required under the Act or rules.

 

The draft also created a separate offence for obtaining a licence fraudulently, dishonestly or through misrepresentation or impersonation. This could attract imprisonment of up to five years, a fine, or both, as per the proposal. 

Higher penalties for damage, pilferage

The draft Bill also proposed specific criminal penalties for knowingly causing damage or destruction to petroleum-related facilities, pilfering petroleum or endangering the safety of any person.

 

For a first offence, the punishment could extend to five years' imprisonment or a fine of up to ₹15 crore, or both. A second or subsequent offence could attract up to seven years' imprisonment or a fine of up to ₹25 crore, or both.

 

The explanatory note said petroleum and petroleum products are “inflammable and hazardous for public safety” and have high economic value.

Critical petroleum infrastructure

The draft Bill also proposed creating a separate category of critical petroleum infrastructure. The Centre could notify infrastructure or areas used for petroleum production, import, storage, refining, transportation or blending as critical infrastructure, it said.

 

Damaging such notified infrastructure could attract imprisonment of up to 10 years and a fine of up to ₹25 crore or the expenses incurred for the loss, destruction or damage, whichever is less.

 

The explanatory note said the provision would make damage to notified critical petroleum infrastructure a specific offence and provide deterrence against criminal activity targeting such facilities.

Existing penalties date back to 1970

The ministry said the framework for offences under the Petroleum Act has remained largely unchanged since the Petroleum (Amendment) Act, 1970. That amendment increased the penalty under Section 23 from ₹500 to imprisonment of up to one month or a fine of ₹1,000. For repeat offences, the punishment was increased to imprisonment of up to three months or a fine of up to ₹5,000, or both.

 

The explanatory note said these monetary penalties had become insignificant over time, pointing to the increase in petrol prices and the expansion of India's refining capacity. It noted that India had six operational refineries with 18.4 million tonnes per annum (MMTPA) of refining capacity in 1970, compared with 23 operational refineries and more than 258 MMTPA in 2026.

 

The ministry also cited the Oilfields (Regulation and Development) Act, 1948 and the Petroleum and Natural Gas Regulatory Board Act, 2006 as examples of laws that prescribe higher penalties for specified violations.

Other proposed changes

The draft Bill also proposed separate provisions for obstructing authorised officers during inspections and failing to report petroleum-related accidents. It also made abetment, attempts and conspiracy to commit the specified offences punishable.

 

It further proposed changes to Section 24 to expand the scope of confiscation to include facilities, works, equipment and material used to commit an offence, in addition to petroleum and receptacles.

 

Section 25 of the Act would also be amended to update court jurisdiction and explicitly provide for the application of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) to complaints, investigations and trials under the Petroleum Act.

 

The ministry has invited comments and suggestions from the public and industry stakeholders within 30 days of publication of the consultation notice.