Draft Petroleum Bill Proposes Up To Rs 25 Crore Fine, Three-Year Jail Term

The government has proposed tougher penalties for unlicensed petroleum operations, including fines of up to Rs 25 crore and imprisonment of up to three years, under the draft Petroleum (Amendment) Bill, 2026. The Ministry of Petroleum and Natural Gas released the draft on Wednesday, September 30, for consultation with stakeholders and members of the public.

The proposed legislation seeks to revise the enforcement framework governing petroleum-related operations, while creating a distinction between minor regulatory breaches and more serious offences. Under the draft, certain breaches of licence conditions could be decriminalised and dealt with through civil penalties instead of criminal proceedings.

For specified violations, the draft proposes a penalty of Rs 2.5 crore for a first breach. The penalty could increase to Rs 5 crore for subsequent violations. The proposed approach is intended to differentiate between regulatory non-compliance and offences considered more serious under the petroleum law.

Operating without the required licence would carry significantly stricter consequences under the proposed legislation. Depending on the offence, an individual or entity could face imprisonment of up to three years, a fine of up to Rs 25 crore, or both. The draft therefore seeks to establish stronger financial and criminal consequences for petroleum operations conducted without the necessary authorisation.

For more serious offences covered by the proposed law, the punishment could extend to 10 years in prison along with a fine of up to Rs 25 crore. The proposed penalties form part of broader changes aimed at updating the existing regulatory and enforcement provisions governing petroleum-related activities.

The government has invited comments and suggestions on the draft Bill from stakeholders and members of the public until October 30, 2026. Submissions can be made to the Ministry of Petroleum and Natural Gas by post or email, according to the Press Information Bureau. Since the legislation is still at the draft stage, its provisions could be revised following the consultation process.

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