The Ministry of Petroleum and Natural Gas on 30 September 2026 released the draft Petroleum (Amendment) Bill, 2026 for public consultation, proposing a sweeping overhaul of the Petroleum Act, 1934. The draft introduces a graded penalty framework that decriminalises minor licence breaches while imposing significantly stiffer fines — up to ₹25 crore — and longer prison terms for serious offences involving unlicensed operations, fraud, or damage to critical petroleum infrastructure.

Key Provisions of the Draft Bill

Under the proposed amendments, carrying out any activity that requires a licence — covering production, import, storage, refining, transportation, or blending of petroleum or petroleum products — without first obtaining one could attract imprisonment of up to three years, a fine of up to ₹25 crore, or both. A continuing violation would additionally attract a penalty of up to ₹10 lakh per day, according to the ministry.

Fraudulently obtaining a licence through misrepresentation, impersonation, or dishonest means carries a heavier punishment: imprisonment of up to five years, a fine, or both. The draft replaces the existing general offence provision under Section 23 of the Petroleum Act with specific, graduated offences and penalties — a structural shift from the current one-size-fits-all approach.

Penalties for Damage to Petroleum Facilities

The Bill draws a sharp distinction between first-time and repeat offenders when it comes to damage to petroleum assets. A first offence involving damage to petroleum facilities, pilferage, or endangering public safety could attract imprisonment of up to five years or a fine of up to ₹15 crore. For a second or subsequent offence, the prison term could extend to seven years and the fine to ₹25 crore.

Damage specifically to critical petroleum infrastructure — a category that presumably covers refineries, pipelines, and storage depots — carries the steepest penalties: imprisonment of up to 10 years and a fine of up to ₹25 crore or the cost of the actual loss or damage, whichever is less.

Civil Penalty Route for Minor Breaches

Notably, the draft carves out an administrative track for lesser violations. Breaches of licence terms and conditions would be handled by a designated adjudicating officer, who could impose a civil penalty of up to ₹2.5 crore for a first breach and up to ₹5 crore for subsequent breaches — without necessarily triggering criminal prosecution.

The adjudicating officer would also be empowered to direct the licence holder to take corrective action and to recommend suspension, revocation, or curtailment of the licence. The ministry stated that the proposed changes aim to 'decriminalise minor regulatory violations while maintaining deterrence against offences that pose risks to petroleum operations, public safety and critical infrastructure.'

Consultation Timeline and What Comes Next

The draft has been released as part of the pre-legislative consultation process, and stakeholders — including industry players and members of the public — can submit comments until 30 October 2026. This comes amid a broader government push to modernise legacy legislation governing the energy sector, several provisions of which date back nearly nine decades.

The final shape of the Bill will depend on the feedback received during this consultation window, after which it is expected to be introduced in Parliament. Energy sector analysts and industry bodies are likely to scrutinise the penalty thresholds and the scope of the 'critical infrastructure' definition closely before the deadline.