Key Details
The draft Petroleum (Amendment) Bill, 2026 would replace the Petroleum Act, 1934’s broad penalty provision with separate routes for regulatory breaches and specified offences.
Licence conditions: An adjudicating officer could order compliance and impose a civil penalty of up to ₹2.5 crore for a first breach or ₹5 crore for a subsequent breach. The officer could recommend suspension or revocation of the licence.
Unlicensed operations: Carrying out an activity that requires a petroleum licence could attract up to three years’ imprisonment or a ₹25 crore fine, or both, plus up to ₹10 lakh a day for a continuing violation.
Damage, pilferage and safety: Intentional or knowing damage to petroleum facilities, pilferage or endangerment of a person’s safety could attract up to five years’ imprisonment or a ₹15 crore fine, or both for a first offence, rising to seven years or ₹25 crore, or both for a repeat offence.
Consultation: The ministry invited public and industry comments within 30 days of its 30 September 2026 notice.
The Bill Separates Licence Breaches From Criminal Offences
The Petroleum Act governs activities including the import, transport, storage, production, refining and blending of petroleum. Its existing general penalty provision can bring breaches of licence conditions into the criminal process. The proposed bill would instead allow an administrative officer to investigate a licence breach, direct compliance and impose a civil penalty. The inquiry would have to follow principles of natural justice and give reasons for its decisions.
This change would not remove other legal liability where a breach endangers public safety or causes grievous hurt or death. The draft also leaves the licensing authority to decide whether a licence should be suspended, revoked or shortened following an adjudicator’s recommendation.
Serious Conduct Gets Specific, Higher Penalties
The bill would create distinct offences for operating without a required licence, fraudulently obtaining one, and damaging or pilfering from petroleum facilities. It would also retain offences for obstructing inspections and failing to report petroleum accidents, with revised penalties.
The Central Government could designate facilities or areas as critical petroleum infrastructure. Damaging notified infrastructure would carry a proposed sentence of up to 10 years’ imprisonment, along with a fine limited by the bill’s specified damage-cost formula.
Enforcement Powers Would Extend Beyond Fines
The draft would expand confiscation beyond petroleum and its containers to include facilities, equipment and materials used to commit an offence. It also updates which courts may try offences and expressly applies the Bharatiya Nagarik Suraksha Sanhita, 2023 to complaints, investigations and trials under the Act.
Policy Relevance
The proposed split could give regulators a more proportionate response to ordinary licence non-compliance while reserving criminal prosecution for conduct such as unlicensed activity, fraud and threats to infrastructure or safety. Its effectiveness will depend on two boundaries being clear in the final law:
Civil versus criminal action: Operators and enforcement officers need to know when a licence breach remains an administrative matter and when conduct warrants prosecution under this or another law.
Adjudication and review: Penalties of up to ₹5 crore make consistent procedures, reasoned orders and a clear route to challenge decisions important. The draft sets out inquiry safeguards but does not specify an appeal route in the proposed provisions.
Follow the Full Consultation Draft Here: Ministry of Petroleum and Natural Gas: Draft Amendments to the Petroleum Act, 1934