India To Modernise 92-Year-Old Petroleum Law; New Changes Explained

India is set to modernise its 92-year-old Petroleum Act, with the government proposing a new enforcement framework under which licence breaches would go civil while serious offences would face tougher penalties.

The Ministry of Petroleum and Natural Gas (MoPNG), on September 30, invited public and industry comments on the draft Petroleum (Amendment) Bill, 2026, which seeks to replace the Act's broad penalty framework with specific offences and an administrative mechanism for civil penalties.

The ministry has invited comments within 30 days of the notification for due consideration.

Why Is Govt Changing The Law?

The Petroleum Act, enacted in 1934, governs the import, transport, storage, production, refining and blending of petroleum. According to the government's explanatory note, its penalty framework was last amended in 1970.

The government has argued that penalties that were significant at the time are no longer adequate for today's petroleum industry.

It cited petrol prices of around ₹0.90 per litre in 1970 compared with ₹95-105 in 2026, while refining capacity has risen from 18.4 MMTPA across six operational refineries to more than 258 MMTPA across 23 refineries.

Licence Breaches To Go Civil

One of the biggest proposed changes is the decriminalisation of breaches of licence terms and conditions.

Under proposed Section 23C, an adjudicating officer authorised by the Centre would conduct an inquiry following the principles of natural justice. The officer could direct a licensee to take corrective action and impose a civil penalty of up to ₹2.5 crore for a first breach and up to ₹5 crore for a subsequent breach.

The officer could also recommend suspension, revocation or curtailment of the licence to the licensing authority.

The distinction is important: the proposal treats breaching the conditions of an existing licence differently from undertaking an activity that requires a licence without obtaining one.

Serious Offences Face ₹25 Cr Penalties

The draft proposes specific criminal offences for conduct that the government considers more serious.

Operating a licensable activity without the required licence could attract up to three years' imprisonment or a fine of up to ₹25 crore, or both, along with an additional fine of up to ₹10 lakh for every day the violation continues.

The proposed Section 23 of the Petroleum (Amendment) Bill, 2026, states, "Whoever undertakes a licensed activity without obtaining the required license, shall be punished with imprisonment for a term that may extend to three years or with fine which may extend to twenty five crore rupees, or with both, and in case of continuing contravention, with additional fine which may extend to ten lakh rupees for every day during which the contravention continues."

Fraudulently or dishonestly obtaining a licence through misrepresentation or impersonation could attract imprisonment of up to five years, fine, or both.

Critical Petroleum Infra Gets Separate Protection

The draft also allows the Centre to notify specified petroleum facilities or areas as “critical petroleum infrastructure”. Causing damage to such infrastructure could attract imprisonment of up to 10 years and a fine of up to ₹25 crore or the expenses for the loss, destruction or damage suffered, whichever is less.

The proposed Section 23(3) targets damage or destruction of petroleum facilities, pilferage and conduct that endangers safety. The punishment could extend to five years' imprisonment or ₹15 crore for a first offence, rising to seven years or ₹25 crore for a subsequent offence.

The Bill also proposes separate provisions for obstructing authorised inspections, failing to report petroleum-related accidents and abetting or conspiring to commit specified offences.

What Else Changes?

The proposed amendments would expand confiscation powers to cover facilities, works, equipment and material used to undertake an offence.

They would also update court jurisdiction, replacing references to pre-Independence “Presidency-towns”, and explicitly apply the Bharatiya Nagarik Suraksha Sanhita, 2023 to complaints, investigations and trials under the Act.

The proposed framework therefore seeks to create a graded system in which the regulatory breaches would move towards civil enforcement, while unlicensed operations and serious safety, fraud, damage and infrastructure-related offences would remain subject to criminal penalties.