October 6, 2026: The Centre has proposed a comprehensive overhaul of the offence and penalty framework under the Petroleum Act, separating routine licence violations from serious criminal offences. The changes are aimed at decriminalising regulatory breaches while increasing penalties for unauthorised petroleum activities, fraud, pilferage, safety violations and damage to petroleum infrastructure.

The Ministry of Petroleum and Natural Gas released the draft Petroleum (Amendment) Bill, 2026, on Wednesday for public and stakeholder consultation. The ministry has invited comments and suggestions within 30 days of publication of the consultation notice.

Under the proposed framework, breaches of petroleum licence terms and conditions would no longer be treated as criminal offences. Instead, an adjudicating officer authorised by the Centre could examine such violations, direct corrective action and impose civil penalties.

The penalty could be up to Rs 25 million for a first breach and up to Rs 50 million for a second or subsequent breach. The officer could also recommend suspension, revocation or curtailment of the licence, depending on the violation.

Unauthorised Operations Face Penalties

The draft retains criminal penalties for undertaking petroleum activities that require a licence without obtaining one. The provision would cover production, import, storage, refining, transportation and blending of petroleum or petroleum products where licensing is required under the Act or rules.

An unauthorised activity could attract imprisonment of up to three years, a fine of up to Rs 250 million, or both. A continuing violation could also attract an additional fine of up to Rs 1 million for every day the contravention continues.

The Bill also proposes a separate offence for obtaining a petroleum licence through fraud, dishonesty, misrepresentation or impersonation. Such an offence could attract imprisonment of up to five years, along with a fine.

The proposed amendments create specific criminal offences for knowingly damaging or destroying petroleum facilities, pilfering petroleum or endangering the safety of any person. The ministry said petroleum and petroleum products are inflammable, hazardous to public safety and have high economic value.

For a first offence, the punishment could extend to five years' imprisonment or a fine of up to Rs 150 million, or both. For a second or subsequent offence, the punishment could extend to seven years' imprisonment or a fine of up to Rs 250 million, or both.

The draft proposes a separate category of critical petroleum infrastructure covering facilities or areas used for petroleum production, import, storage, refining, transportation or blending. The Centre would have the power to notify infrastructure under this category.

Damage to notified critical petroleum infrastructure could attract imprisonment of up to 10 years and a fine of up to Rs 250 million or the expenses incurred for the loss, destruction or damage, whichever is less. The ministry said the provision would create a specific offence for damage to such infrastructure.

The ministry said the offence framework under the Petroleum Act has remained largely unchanged since the Petroleum (Amendment) Act, 1970. At that time, the penalty under Section 23 was increased from Rs 500 to imprisonment of up to one month or a fine of Rs 1,000.

(Source: Business World)