Module 4:

Regulatory Framework For Gas

Dr. Divya Singh Rathor

Assistant Professor
National Law University Odisha
[Link]@[Link]
 What is Natural Gas?
Natural gas is a fossil fuel energy source.
Natural gas contains many different compounds.
The largest component of natural gas is methane, a
compound with one carbon atom and four hydrogen atoms
(CH4).
Natural gas also contains smaller amounts of natural gas
liquids (NGLs, which are also hydrocarbon gas liquids), and
nonhydrocarbon gases, such as carbon dioxide and water
vapor.
Natural gas is used as a fuel and to make materials and
chemicals.
 Formation

Millions to hundreds of millions of years ago, the remains

of plants and animals (such as diatoms) built up in thick
layers on the earth’s surface and ocean floors,
sometimes mixed with sand, silt, and calcium carbonate.
Over time, these layers were buried under sand, silt, and
rock. Pressure and heat changed some of this carbon
and hydrogen-rich material into coal, some into oil
(petroleum), and some into natural gas.
•TYPES OF NATURAL GAS
•CONVENTIONAL
•NON-CONVENTIONAL
•ASSOCIATED

•COAL BED METHANE

Conventional Natural Gas- When Natural gas moved
into large cracks and spaces between layers of
overlying rock. The natural gas found in these types of
formations is sometimes called conventional natural
gas.

Unconventional Natural Gas- When natural gas occurs

in the tiny pores (spaces) within some formations of
shale, sandstone, and other types of sedimentary rock.
This natural gas is also referred to as shale gas or tight
gas.
Associated Natural Gas– When the NG occurs with
the deposits of crude oil

Coal Bed Methane- When the NG occurs with the

deposits of coal

PLACE OF OCCURRENCE
1. Onshore
2. Offshore
 Coal Bed Methane (CBM)
Coalbed Methane (CBM), an unconventional source of natural gas is
now considered as an alternative source for augmenting India’s
energy resource. India has the fifth largest proven coal reserves in
the world and thus holds significant prospects for exploration and
exploitation of CBM.

In order to harness CBM potential in the country, the Government of

India formulated CBM policy in 1997 wherein CBM being Natural Gas
is explored and exploited under the provisions of OIL Fields
(Regulation & Development) Act 1948 (ORD Act 1948) and Petroleum
& Natural Gas Rules 1959 (P&NG Rules 1959) administered by Ministry
of Petroleum & Natural Gas (MOP&NG).
- Prognosticated resources refer to the
estimated total quantity of CBM that is
believed to exist in a given area, based on
geological studies and modeling — before
any actual extraction or detailed exploration
has taken place.
So, prognosticated CBM resources are the
predicted volumes of methane gas that
could potentially be extracted from coal
beds, based on scientific assessments.
hale Gas
fine-grained, sedimentary rock formed as a result of the
on of clay, silt, mud and organic matter over time and is
nsidered equivalent to mudstone. Shales were deposited in
as, river deltas, lakes and lagoons and are one of the most
sedimentary rock types, found at both the Earth’s surface and
erground. Shale gas is natural gas found in shale deposits,
trapped in microscopic or submicroscopic pores. This natural
mixture of naturally occurring hydrocarbon gases produced
decomposition of organic matter (plant and animal remains).
shale gas consists of 70 to 90 per cent methane (CH 4), the
ocarbon target for exploration companies. This is the gas used
ting electricity and for domestic heating and cooking.
Basin

Basin:
Assam Arakan Basin
 GAS HYDATE EXPLORATION IN INDIA
Gas hydrate is a crystalline solid, its building blocks consist of a gas molecule
surrounded by a cage of water molecules. Each molecule of Gas hydrate contains
upto 164 m3 of Methane (CH4). Initial work in India on Gas Hydrates as energy
resource, was done by GAIL and NIO. In 1995 an expert committee realized the
potential of gas hydrates in India.
Gas hydrate exploratory activities/ research in India is being steered by the Ministry
of Petroleum & Natural Gas under National Gas Hydrate Program (NGHP) which
was initiated in 1997 with participation from Directorate General of Hydrocarbons
(DGH), National E&P companies (Oil and Natural Gas corporation Ltd, GAIL India
Ltd, Indian Oil Corporation & Oil India Ltd) and National Research Institution
(National Institute of Oceanography, National Geophysical Research Institute and
National Institute of Ocean Technology). Steering Committee is headed by
Secretary, P&NG with Joint Secretary (E) as convener. The Technical Committee is
chaired by DG, DGH and has participation from all National Oil Companies (NOC)
like OIL, ONGC, GAIL, IOCL, and National Institutes like the NGRI, NIO & NIOT. The
NGHP was restructured in the year 2000.
 Process of extraction - General
Geologists study the structure and processes of the earth and locate
the types of geologic formations that are likely to contain natural gas
deposits.
seismic surveys on land and in the ocean to find the right places to drill
natural gas and oil wells.
Seismic surveys create and measure seismic waves in the earth to get
information on the geology of rock formations.
Seismic surveys on land may use a thumper truck, which has a
vibrating pad that pounds the ground to create seismic waves in the
underlying rock.
Sometimes, small amounts of explosives are used. Seismic surveys
conducted in the ocean use blasts of sound that create sonic waves to
explore the geology beneath the ocean floor.
If the results of seismic surveys indicate that a site has potential for
producing natural gas, an exploratory well is drilled and tested. The results
of the test provide information on the quality and quantity of natural gas
available in the resource.

If the results from a test well show that a geologic formation has enough
natural gas to make a profit, one or more production (or development)
wells are drilled.

COMMERCIAL PRODUCTION CRITERIA IN INDIA

Natural gas wells can be drilled vertically and horizontally into natural
gas-bearing formations. In conventional natural gas deposits, the natural
gas generally flows easily up through wells to the surface.

PROCESSED FOR SALE AND CONSUMPTION

HYDRAULIC FRACTURING OR FRACKING

Sometimes referred to as unconventional production.

Used where natural gas is produced from shale and other
types of sedimentary rock formations by forcing water,
chemicals, and sand down a well under high pressure.
breaks up the formation, releases the natural gas from the
rock, and allows the natural gas to flow to and up wells to
the surface.
At the top of the well, natural gas is collected in gathering
pipelines and sent to natural gas processing plants.
US uses this technique
WET NATURAL GAS--- Natural gas withdrawn from natural gas
or crude oil wells is called wet natural gas because, along
with methane, it usually contains NGLs—ethane, propane,
butanes, and pentanes—and water vapor. Wellhead natural
gas may also contain nonhydrocarbons such as sulfur, helium,
nitrogen, hydrogen sulfide, and carbon dioxide, most of
which must be removed from natural gas before it is sold to
consumers.

The separated NGLs are called natural gas plant liquids

(NGPLs), and the processed natural gas is
called dry, consumer-grade, or pipeline-quality natural gas.
Some wellhead natural gas is sufficiently dry and satisfies
pipeline transportation standards without processing.
 ODORANT

ETHYL MERCAPTAN COMMON

Mahanagar Gas Ltd. uses “Spotleak”
which is blend of mercaptans and
sulphides
ADDED TO INFUSE SMELL
SMELLS LIKE ROTTEN EGG
NEEDED AS MANDATORY REQIREMENT IS
15319 (2003)
If change in Odorant is
required then
permission/Approval
from PNGRB is
mandatory
 History
OIL WELL- DIGBOI
WATERSHED- BOMBAY HIGH
The Indian Co. "TATA engineering co." has also drilled several wells in
Jagatia, Gujarat and produced small amount of gas in 1930s.
thrust was given for survey in area of Himalayan foothills and adjoining
Ganga plains, alluvial tracts of Gujarat, upper Assam and basins of Bengal.
The exploratory drilling carried out in Himalayan foothill during 1957,
remained unsuccessful. Within a year of being formed, ONGC discovered
oil at Cambay. The giant Ankleshwar field in the state of Gujarat in 1960,
Kalol in 1961, Lakwa in 1964, Geleki in 1968 and Gas discovery-Manhar
tibba in Rajasthan in 1969 were discovered subsequently.
Eocene gas was discovered by OIL in Tengakhat field of Assam in 1973.
By mid 1980s ONGC successfully discover prospects in Cauvery and KG basin.
Kharsang oilfield was discovered by OIL in 1976 and in the same year ONGC
discovered one of India’s biggest gas find of 283.17 BCM in the Bassein fields off
Mumbai’s coast. Other gas fields discovered by ONGC were mid-Tapti, south Tapti
and B-55. In 1978, OIL ventured out of Assam into Orissa offshore and onshore. OIL
also venture into offshore Andamans in 1979-89 and onshore Rajasthan.
In 1982, ONGC made its biggest gas discovery in Gandhar, Cambay basin Gujarat
and by 1986 KG basin were put in global map with several substantial discoveries
made. By the end of 1986, 3rd round of international bidding for exploration block
were offered. OIL and ONGC were offered 40% stake in JV if field was found viable.
Few foreign companies participated but there was no committed exploration or
breakthrough discovery. The foreshore terminal of IOC was commissioned in Madras
(Chennai). However OIL and ONGC's effort continued in several parts of India and by
1989 OIL discovered gas in Tanot (Mata Temple) in Rajasthan and ONGC discovered
south Heera in Mumbai offshore.
GAS WELLS IN INDIA
India produces both associated and non-associated
natural gas.
India’s natural gas reserves are primarily located
offshore in the Krishna-Godavari Basin, Bombay High,
and the Rajasthan Basin.
Onshore reserves are located in Assam and Gujarat.
As of fiscal year (FY) 2023–24, total natural gas
production was 35,717 Million Standard Cubic Metres.
 EXPORT-IMPORT OF NATURAL GAS

Ranked 12th as a consumer of natural gas, consuming 2.2 trillion cubic feet
(Tcf) in 2023, and was the 4th largest importer of liquefied natural gas (LNG).
Natural gas production in India increased 5.1% in 2023 from the previous year,
marking the third straight year of continuous growth.
Production reached over 1.2 Tcf(Trillion Cubic feet) in 2023, the highest since
2012.22
In India’s FY 2022, most natural gas production came from offshore fields (68%
offshore and 32% onshore).
Assam was the highest-producing state for onshore natural gas, accounting for
almost one-third of total onshore natural gas production, followed by Rajasthan
India had 40.3 Tcf of recoverable natural gas reserves in 2023. The reserves are
split nearly evenly between offshore (53.4%) and onshore (46.6%) fields.
 The industrial sector has consistently been the top natural gas
consumer, accounting for 67% of total consumption in 2023. This
large share is mainly due to India’s fertilizer industry, which grew
by almost 10% from the previous fiscal year and accounted for
33% of all-natural gas consumption in FY 2022
In 2023, India had 14,400 miles of operational natural gas
pipelines, with an additional 7,585 miles of pipeline in various
stages of development.
Some of the larger natural gas pipeline projects under
development are the: –
❑ Urja Ganga pipeline— 2,054-mile pipeline with a completion date
of March 2025
❑ Jagdishpur-Haldia Phase II —a 1,181-mile pipeline with a
completion data of 2028
 COAL GASIFICATION
India is investing in coal gasification, which has been described as a
potentially cleaner way to utilize its large domestic coal deposits.
Coal gasification is a thermo-chemical process that convert coal into
synthesis gas or "syngas", primarily consisting of carbon monoxide and
hydrogen. With India importing approximately 83% of its oil, over 90% of its
methanol, and 13-15% of its ammonia, coal gasification offers an
opportunity to reduce reliance on imports and conserve foreign
exchange, especially in the oil, gas, fertilizer, and petrochemical sectors.
The gasification projects will lead to diversified use of coal partial import
substitution for oil and gas and cleaner utilization of India’s abundant coal
reserves.
Currently, the two approved coal gasification projects are a
coal-to-synthetic-natural-gas project and a coal-to-ammonium-nitrate
project.
USE OF NATURAL GAS
GENERATE ELECTRICITY
HEATING – US, HOUSES ARE HEATED USING
GASES,
TRANSPORTATION- CNG
Production-chemicals, fertilizers and
hydrogen.
NATURAL GAS BASED POWER PLANTS

The Central Electricity Authority under Ministry of Power,

monitors 62 gas based power stations, with a total
capacity of 23,845 MW using gas as primary fuel.

NTPC, DADRI CCPP

RATNAGIRI (RGPPL-DHABHOL)
ETC
 WHY NATURAL GAS?????

CLEANER
“Although burning natural gas emits considerably less
CO2 (and other pollutants) than coal or oil, it remains a
significant source of emissions that must be reduced to
meet international climate goals.
Methane, the primary component of natural gas, is a
potent greenhouse gas. Leaks from gas pipelines and
processing facilities, as well as the intentional venting or
flaring of unwanted gas at production sites, mean that
oil and gas extraction operations themselves are
substantial contributors to climate change, even
before any fuel is burned.”…..IEA
 ACTIVITIES IN GAS SECTOR

UPSTREAM- EXPLORATION, EXTRACTION AND

PRODUCTION
1. Ministry of Petroleum and Natural Gas (MoPNG)
2. Directorate General of Hydrocarbons (DGH) in India
3. Oilfields (Regulation and Development) Act, 1948
4. PNG RULES, 1959- DRAFT 2025
5. HELP
6. All other Mining Laws as applicable
 INCREASING DOMESTIC DEMAND
DECREASING/ STILL DOMESTIC
PRODUCTION
GEO-POLITICAL UNCERTAINITIES
ENDEAVOUR IS TO MOVE AWAY FROM A
CRUDE OIL AND NATURAL GAS CENTRIC
REGIME TO A WIDER “mineral oil” REGIME
THAT BRINGS THE WIDER ARRAY OF
HYDROCARBON ENERGY WITHIN ITS FOLD.
 Draft PNG RULES 2025

MODERNISE INDIA’S UPSTREAM OIL AND GAS

SECTOR WITH A FOCUS ON
INVESTOR CONFIDENCE,
EASE OF BUSINESS AND
ENVIRONMENTAL SUSTAINABILITY
FEEDBACK FROM STAKE HOLDERS- 17TH JULY
2025
 STRIKING FEATURES OF THE DRAFT
MANDATORY FOR THE GOVERNMENT TO GIVE REASONS IN WRITING FOR REJECTION OF ANY
APPLICATION.
GHG FOCUS PROVISION FOR RESERVOIR SEQUESTRATION RATHER THAN ATMOSPHERIC
RELEASE
INTEGRATED ENERGY PROJECT- COMBINE CONVENTIONAL AND NON-CONVENTIONAL IN
ONE PROJECT

MISS--- CONTRACTUAL REWRITING- VEILED ATTEMPT TO REWRITE CONTRACTS IN A MANNER THAT

SUITS GOVT.

POINT TO PONDER--- CAPITAL INTENSIVE SECTOR, DISPUTE WILL DRIVE AWAY INVESTMENTS.
RESERVOIR SEQUESTRATION
 MID STREAM

Processing, storage, and transportation of natural

gas after it's extracted (upstream) and before it's
delivered to consumers (downstream).
Petroleum and Natural Gas Regulatory Board Act,
2006

DOWNSTREAM
Petroleum and Natural Gas Regulatory Board Act, 2006
THE PETROLEUM AND MINERALS PIPELINES (ACQUISITION OF
RIGHT OF USER IN LAND) ACT, 1962
THE [OILFIELDS] (REGULATION
AND DEVELOPMENT) ACT,
1948
AS AMENDED IN 2025
Provides for the
regulation of oilfields and
for the development of
mineral oil resources.
(a)The expression ‘lessor” and “lessee” respectively include a licensor
and licensee;

(c) "mineral oils" means any naturally occurring hydrocarbon,

whether in the form of natural gas or in a liquid, viscous or solid
form, or a mixture thereof, and includes crude oil, natural gas,
petroleum, condensate, coal bed methane, oil shale, shale
gas, shale oil, tight gas, tight oil, gas hydrate in their usual
industrial connotation and other gases occurring in association
with mineral oils, but does not include coal, lignite and helium
occurring in association with petroleum or coal or shale;
(d) "mining lease" means a lease granted for the purpose of
searching for, winning, working, getting, making merchantable,
carrying away or disposing of 3[mineral oils] or for purposes
connected therewith, and includes an exploring or a
prospecting license 4[granted before the commencement of
the Oilfields (Regulation and Development) Amendment Act,
2025];

(e) "oilfield" means any area where any operation for the
purpose of obtaining 5[mineral oils], refined oil, partially refined
oil and any of the products of petroleum in a liquid or solid
state, is to be or is being carried on.
(f) "petroleum lease" means a lease granted on
or after the commencement of the Oilfields
(Regulation and Development) Amendment Act,
2025, for the purpose of prospecting, exploration,
development, production, making
merchantable, carrying away or disposing of
mineral oils or for purposes connected therewith,
and includes a mining lease granted before the
commencement of the said Act.
4. No 1[petroleum lease] to be valid unless it is in
accordance with this Act.--- (1) No 1[petroleum
lease] shall be granted after the commencement
of this act otherwise than in accordance with the
rules made under this Act.

1
(2) Any [petroleum lease] granted contrary to
the provisions of sub-section (1) shall be void
and of no effect.
4A. Prospecting, etc., of mineral oils.--- No person shall
undertake any operation in any part of India or in its territorial
waters, continental shelf and exclusive economic zone for the
purposes of prospecting, exploration, development or
production, making merchantable, carrying away or disposing of
mineral oils, except under a valid lease granted under this Act
and the rules made thereunder:

Provided that nothing in this section shall affect any operation

undertaken in any area in accordance with the terms and
conditions of a license or lease granted before the
commencement of the Oilfields (Regulation and Development)
Amendment Act, 2025.
Section 5- Power to make rules as
1
respects [petroleum leases]
1) The Central Government may, by notification in the Official
Gazette, make rules for regulating the 2[grant or extension or
renewal of petroleum leases or for prohibiting the grant or
extension or renewal] of such leases in respect of any 3[mineral
oil] or in any area.

2) In particular, and without prejudice to the generality of the

foregoing power, such rules may provide for all or any of the
following matters, namely: ---
 (

(a) the manner in which, the 3[mineral oil] or areas in respect of which
and the persons by whom, applications for 4[petroleum leases] may be
made and the fees to be paid on any such application;

(b) the authority by which, the terms on which, and the conditions subject
to which, 5[petroleum leases may be granted or extended or renewed];

(C) the maximum or minimum area of the petroleum leases;

(ca) the period for which any petroleum lease may be granted or extended
or renewed;

(cb) the terms on which petroleum leases may be merged or combined;]

(d) the fixing of the maximum and minimum rent payable by a lessee,
whether the 7[oilfield] is worked

[(e) the mechanism to enable resolution of disputes arising out of, or in

relation to the petroleum leases or any authorisation granted by the Central
Government for working of an oilfield through alternative dispute resolution
methods under any law for the time being in force, in a place within India or
outside India;
or not.

(f) any other matter which is required to be, or may be made by rules or in
respect of which provision is to be made under this section.]
8
Section 6- Power to make rules as respect to
development of mineral oil-- CG
(c) the development of any 5[mineral oil resources] in any area by
prescribing or regulating the use of any engines, machinery or other
equipment;
(d) the regulation of drilling, re-drilling, deepening, shutting down,
plugging and abandoning of 6[mineral oil wells and decommissioning and
site restoration activities] in an oilfield and for the limitation or prohibition of
such operations and for the taking of remedial measures to prevent waste
of or damage to 7[mineral oils];
(e) the regulation of the methods of producing 7[mineral oils] in any
oilfield, and the limitation or prohibition of such methods;
(f) the compulsory notification of all new borings and shaft
sinkings, and the preservation of boring records and specimens
of cores of all new bore-holes;
(g) the taking of samples from 8[oilfields] and new bore-holes;
(ga) the collection, aggregation, dissemination, use or sharing
of the data and samples related to mineral oils with the Central
Government or any other party nominated by the Central
Government, for the purposes of economic development,
academic research and public welfare;]
(h) the regulation of the arrangements for the storage
of 3[mineral oils] and the stocks thereof that may be kept by any
person;
i) the collection of royalties, and the levy and collection of fees or
taxes, in respect of mineral oils 11[produced];]
(j) the submission by the 12[lessees of oilfields of special or periodical
returns and reports, and the formats] in which and the authorities to
whom such returns and reports shall be submitted.
(k) the sharing of production and processing facilities and other
infrastructure, both on land and offshore, by two or more lessees for
more efficient development of oilfields or production of mineral oils;
(l) the safety at oilfields including safety mechanisms, standards and
protocols for conduct of mineral oil operations, protection of persons
and infrastructure such as terminals, installations, other structures and
devices, and mineral oils;
(m) the sound management of mineral oils in accordance with
good international petroleum industry practices including
obligations of lessees towards protection of environment
during operations and while abandoning, decommissioning
and undertaking site restoration activities;
(n) the unitisation of leases across States, Union territories and
offshore leases, where there is reservoir continuity or
connectivity, or for efficient exploration, development or
production of mineral oils;
(o) promote and facilitate adoption of measures for reducing
carbon and greenhouse gas emissions and decarbonising
operations including but not limited to use of oilfields for other
purposes, such as, production of hydrogen, carbon capture
utilisation and storage or coal gasification;
(p) reporting of carbon and greenhouse gas
emissions related to, arising out of, or resulting from,
mineral oil operations;
(q) promote and facilitate development of
comprehensive energy projects at oilfields,
including planning, development, installation,
sharing and use of infrastructure for carrying out
mineral oil operations and solar, wind or other form
of renewable energy projects;
(r) any other matter which is required to be, or may
be made by rules, or in respect of which provision is
to be made under this section.]
 SEC 6A- AFTER 1969 AMENDMENT

6A. Royalties in respect of mineral oils.--- (1) The holders of a

mining lease granted before the commencement of the
Oilfields (Regulation and Development) Amendment Act,
1969 (39 of 1969) shall, notwithstanding anything contained in
the instrument of lease or in any law in force at such
commencement, pay royalty in respect of any mineral
oil 2[produced] or collected by him from the leased area after
such commencement, at the rate for the time being specified
in the Schedule in respect of that mineral oil.
 (

2) The holder of a mining lease 3[or petroleum lease] granted on

or after the commencement of the Oilfields (Regulation and
Development) Amendment Act, 1969 (39 of 1969) shall pay
royalty in respect of any mineral oil 2[produced] or collected by
him from the leased area at the rate for the time being specified
in the Schedule in respect of that mineral oil.

(3) Notwithstanding anything contained in sub-section (1) or

sub-section (2), no royalty shall be payable in respect of
any 4[mineral oils] which is unavoidably lost or is returned to the
reservoir or is used for drilling or other operations relating to the
production of 5[mineral oils].
[(4) The Central Government may, by notification in the Official
Gazette, amend the Schedule so as to enhance or reduce the rate
at which royalty shall be payable in respect of any mineral oil
with effect from such date as may be specified in the notification
and different rates may be notified in respect of same mineral
oil 2[produced] or collected from the areas covered by different
classes of 7[petroleum leases]:

Provided that the Central Government shall not fix the rates of
royalty in respect of any mineral oil so as to exceed twenty per
cent. of the sale price of the mineral oil at the oilfields or the oil
well-head, as the case may be.
(5) If the Central Government, with a view to
encourage exploration in off-shore areas, is
satisfied that it is necessary in the public interest
so to do, it may, by notification in the Official
Gazette, exempt generally, either absolutely or
subject to such conditions as may be specified in
the notification, mineral oil produced from such
areas from the whole or any part of the royalty
leviable thereon.]
9. Penalties.--- (1) Whoever contravenes the provisions of section 4A or
sub-section (1) or sub-section (2) of section 6A shall be liable to a penalty
of twenty-five lakh rupees.

(2) Any rule made under any of the provisions of this Act may provide that
any contravention thereof shall be liable to a penalty of twenty-five lakh
rupees.

(3) Whoever, after having been punished with penalty as referred to in

sub-section (1) or sub-section(2), continues to contravene any of the
provisions of this Act or rules made thereunder, shall be liable to pay a
further penalty which may extend to ten lakh rupees per day for the entire
duration during which the contravention continues commencing from the
date of imposition of the first penalty.
 2025 AMENDMENT
9A. Adjudication.--- (1) The Central Government shall, by notification in the Official
Gazette, make rules for providing eligibility criteria for designating an adjudicating
authority and for the manner of conducting inquiry and imposing penalty under the
provisions of this Act:
Provided that no officer below the rank of Joint Secretary to the Government of
India shall be designated as an adjudicating authority
(2) The adjudicating authority may summon and enforce the attendance of any
person acquainted with the facts and circumstances of the case to give evidence or
to produce any document, which in his opinion may be useful for or relevant to the
subject matter of the inquiry and if, on such inquiry, he is satisfied that the person
concerned has contravened the provisions of this Act or the rules made thereunder,
he may determine such penalty in accordance with the provisions of this Act.

(3) No penalty shall be imposed on any person under this section or any rules made
thereunder without affording an opportunity of being heard.]
[9B. Appeal.--- (1) Every appeal against the order of the
adjudicating authority under this section shall lie with the
Appellate Tribunal referred to in section 30 of the Petroleum and
Natural Gas Regulatory Board Act, 2006, (19 of 2006) and the
provisions contained in sections 33, 34, 35 and 36 of that Act,
shall, mutatis mutandis apply, in relation to every such appeal.

(2) The provisions contained in section 37 of the Petroleum and

Natural Gas Regulatory Board Act, 2006, (19 of 2006) shall
mutatis mutandis apply, in relation to every appeal against the
order of the Appellate Tribunal referred to in sub-section (1).]
 Section 11- Powers of inspection-
Officer authorized by the Central Government in this behalf
shall have the right to –
(a) enter and inspect any mine ;
(b) order the production of any document, book, register or
record in the possession or power of any person having
the control of or connected with, any mine;
(c) examine any person having the control of, or connected
with, any mine.
13A. Validity of leases and licenses.--- All mining
leases and licenses granted before commencement
of the Oilfields (Regulation and Development)
Amendment Act, 2025, shall continue to be valid for
their respective tenure subject to the terms and
conditions governing the grant of such leases and
licenses.]
NELP AND
HELP
Objective
The main objective of NELP was to attract
significant risk capital from Indian and
Foreign companies, state of art
technologies, new geological concepts
and best management practices to
explore oil and gas resources in the
country to meet rising demands of oil
and gas.
New Exploration Licensing Policy (NELP) was formulated by the
Government of India, during 1997-98 to provide a level playing
field to both Public and Private sector companies in exploration
and production of hydrocarbons with Directorate General of
Hydrocarbons (DGH) as a nodal agency for its implementation.

Government of India’s commitment to the liberalization process

is reflected in NELP, which has been conceptualized keeping in
mind the immediate need for increasing domestic production.
To attract more investment in oil exploration and production,
NELP has steered steadily towards a healthy spirit of competition
between National Oil Companies and private companies. This
has been a landmark event in the growth of the upstream oil
sector in India.
The development of E&P sector has been significantly
boosted through this policy of Government of India, which
brought major liberalization in the sector and opened up
E&P for private and foreign investment, where 100%
Foreign Direct Investment (FDI) is allowed. Under NELP,
which became effective in February 1999, acreages are
offered to the participating companies through the
process of open competitive bidding. The terms and
conditions of this open and transparent policy rank
amongst the most attractive in the world.
Under NELP, blocks were awarded to Indian, private and
foreign companies through International Competitive
Bidding process where NOCs viz. ONGC and Oil are also
competing on equal footing.
The Government has taken number of
measures to bring in healthy competition and
public participation by the way of NELP for
exploration & production of Oil & gas in the
country. NELP has not only accelerated the
quest for hydrocarbon exploration, but has
also brought the state of the art technology
and efficiency of operations /management to
the country.
The salient features of NELP are as under:
100% Foreign Direct Investment (FDI) is allowed
under NELP
No mandatory state participation through
ONGC/OIL or any carried interest of the
Government.
Blocks to be awarded through open international
competitive bidding
ONGC and OIL to compete for obtaining the
petroleum exploration licenses (PEL) on a
competitive basis instead of the existing system of
granting them PELs on nomination basis.
ONGC and OIL to get the same fiscal and
contract terms as private companies.
Freedom to the contractors for marketing of crude
oil and gas in the domestic market.
Royalty at the rate of 12.5% for the onland areas
and 10% for offshore areas.
Royalty to be charged at half the prevailing rate
for deep water areas beyond 400 m bathymetry
for the first 7 years after commencement of
commercial production.
Cess to be exempted for production from blocks offered
under NELP.
Companies to be exempted from payments of import
duty on goods imported for petroleum operations.
No signature, discovery or production bonuses.
Agreement between government and contractor is
governed by a Production Sharing Contract. A Model
Production Sharing Contract is created which is
reviewed for every NELP round.
Contracts to be governed in accordance with
applicable Indian Laws.
 PRODUCTION SHARING CONTRACT
The Production Sharing Contracts (PSCs) under NELP are
based on the principle of “profit sharing”. When a
contractor discovers oil or gas, he is expected to share
with the Government the profit from his venture, as per
the percentage given in his bid. Until a profit is made,
no share is given to Government, other than royalties
and cesses. Since the contract requires the profit to be
measured, it becomes necessary for the cost to be
accounted for and checked by the Government. To
prevent loss of Government revenue, there are
requirements for Government approval at various
stages to prevent the contractor from exaggerating the
Activities cannot be commenced till the
approval is given. This process of approval of
activities and cost gives the Government a lot
of discretion and has become a major source
of delays and disputes. Many projects have
been delayed for months and years due to
disagreement between the Government and
the contractor regarding the necessity or lack
of necessity for particular items of cost, and
the correctness of the cost.
 CHALLENGES IN NELP
Separate policies and licenses for different types of
hydrocarbons (conventional oil and gas, shale gas,
coal-bed methane, etc.), leading to inefficiencies
and overlapping resource allocation.
Delay in Approvals
Profit sharing model
Unconventional Hydrocarbons not addressed like
shale gas etc
Hydrocarbon Exploration and Licensing Policy (HELP)--
2016

Four main facets of this policy are:

uniform license for exploration and
production of all forms of hydrocarbon,
an open acreage policy,
easy to administer revenue sharing model
and
marketing and pricing freedom for the
crude oil and natural gas produced.
Enhance domestic oil & gas production,
bring substantial investment in the sector and generate
sizable employment. The policy is also aimed
at enhancing transparency and reducing administrative
discretion.

The uniform licence will enable the contractor to explore

conventional as well as unconventional oil and gas
resources including CBM, shale gas/oil, tight gas and
gas hydrates under a single license. The concept
of Open Acreage Policy will enable E&P companies
choose the blocks from the designated area.
 An open acreage policy
Under OALP, companies are allowed to carve out areas
they want to explore oil and gas in. Companies can put in
an expression of interest for any area throughout the year
but such interests are accumulated thrice in a year. The
areas sought are then put on auction.

The OALP has helped in removing red-tapism and brought

in a quantum jump in the Exploration & Production sector.
 PRODUCTION SHARING CONTRACT
The earlier contracts were based on the concept of profit
sharing where profits are shared between Government
and the contractor after recovery of cost. Under the profit
sharing methodology, it became necessary for the
Government to scrutinize cost details of private
participants and this led to many delays and disputes.
Under the new regime, the Government will not be
concerned with the cost incurred and will receive a share
of the gross revenue from the sale of oil, gas etc. This is in
tune with Government’s policy of “Ease of Doing
Business”.
A graded system of royalty rates have been
introduced, in which royalty rates decreases from
shallow water to deepwater and ultra-deep water. At
the same time, royalty rate for onland areas have
been kept intact so that revenues to the state
governments are not affected. On the lines of NELP,
cess and import duty will not be applicable on blocks
awarded under the new policy. This policy also
provides for marketing freedom for crude oil and
natural gas produced from these blocks. This is in tune
with Government’s policy of “Minimum Government
–Maximum Governance”
 SAMPLE OF PSC

[Link]
wnloads/56cee2dfb848d4_MPSC_NELP-
[Link]
CLAUSES
TYPES OF PETROLEUM CONTRACT
Petroleum Operations Contract

Reconnaissance Contract
 Petroleum Operations Contract

(i) Petroleum Operations Contract will allow investors to undertake, as

the context may require, Exploration Operations, Development
Operations or Production Operations or any combination of two or
more of such operations, including construction, operation and
maintenance of all necessary facilities, plugging and abandonment
of wells, safety, environmental protection, transportation, storage,
sale or disposition of petroleum to the delivery point , site restoration
and any or all other incidental operations or activities as may be
necessary.
(ii) Terms of Petroleum Operations Contract will be as per the Model
Revenue Sharing Contract (MRSC) approved by the Government.
 Reconnaissance Contract

(i) Investors interested in carrying out Exploration Operations in areas

available for exploration in the onshore/offshore sector may submit
EoI to the DGH for Reconnaissance Contract in the format provided
by DGH.
(ii) Reconnaissance Contract will allow parties to carry out
Exploration Operations in a given block for all types of hydrocarbons
for a period of 2 (two) years with a provision for an extension up to 1
(one) year.
(iii) Post completion of reconnaissance activity contractor will submit
all the data so gathered to the DGH as per the data policy notified
by the DGH.
iv)Operator of the Reconnaissance Contract shall have the exclusive right
to license the data (excluding raw data, physical oceanographic data and
DGH data) during the contract duration (12 (twelve) years),provided that
license of such data to companies incorporated in neighboring countries of
India or countries as notified by the DGH from time to time will require prior
permission of the DGH.
(v) Operators of the Reconnaissance Contract for a particular block, upon
completion of at least 80% (eighty percent) of the work programme
commitments, becomes eligible to submit an intent to migrate to Petroleum
Operations Contract. To exercise this option, the contractor will submit an
intent to migrate to the DGH, at least 90 (ninety) days prior to the expiry of
the Reconnaissance Contract. The contractor will have to meet the
Technical Qualification Criteria as well as the Financial Qualification Criteria
as applicable (mentioned in Section 2) for the Petroleum Operations
Contract for the block under consideration. Incentives for migration to
Petroleum Operations Contract is specified in Section 8 of this document
vi) Upon receipt of the intent to migrate to Petroleum Operations Contract
for the area for which it has undertaken reconnaissance, the DGH shall
have the right to license the reconnaissance data collected by the
Operator for the Contract Area to all other Bidders. The data will be
licensed at price bid by the contractor. The proceeds of such license of
data will be deposited in an escrow account.

(vii) In-case,the Operator of the Reconnaissance Licensee does not win

the bid for migration to Petroleum Operations Contract, then the proceeds
realized through license of Reconnaissance Data to bidder(s) will be
transferred to the contractor. However, if the contractor wins the bid, then
none of the consortium member shall have claim over the proceeds
realized from such a license of data and all the rights to license the data
shall lapse with immediate effect.
(viii) Investors who have completed term of the Reconnaissance
Contract for that block, and have not submitted an intent to
migrate to Petroleum Operations Contract within permitted time,
shall not be obliged to bid for Petroleum Operations Contract if
and when the DGH puts out the block to bid.
(ix) Originator of the Reconnaissance Contract for a block will
be provided incentives as mentioned in Section 8 of the
document.
(x) The parties procuring data from Reconnaissance Licensee
shall be eligible to set off the seismic data against their
Committed Work Programme.
(xi) Reconnaissance Licensee may, at its discretion, allow any
third party to undertake nonexclusive multi-client surveys
 Cases ON ALLOCATION UNDER NELP

Reliance Natural Resources Ltd. [“RNRL”] v. Reliance Industries

Ltd. [“RIL”]

Reliance Industries Ltd. & Ors vs U.O.I. AIR 2014 SUPREME COURT
2342

KG BASIN ARBITRATION ONGOING MATTER-

DHC DIVISION BENCH JUDGEMENT -
[Link]
ygr/Union_of_India_Vs_RIL.pdf
Reliance Natural Resources
Ltd. [“RNRL”] v. Reliance
Industries Ltd. [“RIL”]
AIRONLINE 2010 SC 285
In 1973, late Dhirubhai Ambani set up the RIL consisting of
Oil, gas, refining and exploration, textile, yarn, polyster,
petrochemicals and communication business with his two
sons Mukesh Ambani and Anil Ambani.
In the year 1999, the Government of India announced a
New Exploration and Licensing Policy, 1999 (in short
"NELP").
This policy provided that various petroleum blocks
could be awarded for exploration, development and
production of petroleum and gas to private entities.
In the same year, i.e. 1999, RIL has formed a Consortium
with NIKO. Their consortium was the successful bidder
for Block KG-D6 and was called the Contractor.
On 24.03.2000, Reliance Platforms [Link] Private
Limited was incorporated which was changed to Global Fuel
Management Services Limited and now called "Reliance Natural
Resources Limited (RNRL).
A Production Sharing Contract (in short "PSC") has been entered
into between the Government of India and the Contractor on
12.04.2000.
Allocated blocks are called as "Deep Water Exploration Blocks". The
exploration in such areas require employment of highly skilled and
experienced technical personnel and an extremely expensive
and time-consuming exercise. As recorded, all exploration
expenses required to locate petroleum resources have to be borne
by the Contractor. Therefore, the Contractor is bound to incur huge
cost and resources for discovery of reserves in the area at their risk.
On 06.07.2002, Mr. Dhirubhai Ambani passed away.
Sometime thereafter, differences started between Mukesh
Ambani and Anil Ambani over the management and
control of the group companies. Both the brothers, at the
relevant time, were looking after the affairs of RIL in all
respects including the group companies.

The provisions of the PSC were known to the respective

Board of Directors as well as to both the brothers. Mukesh
Ambani was the Managing Director and Anil Ambani was
the Joint Managing Director of the RIL.
In October, 2002, the Consortium (NIKO & RIL)
announced discovery of significant result of KG-D6 Block.
Sometime in the year 2003, the National Thermal Power
Corporation Limited (in short "NTPC") floated a global
tender for supply of gas to its power projects.

NTPC invited international competitive bids for supply of

natural gas to its power plants located in the State of
Gujarat to meet its fuel requirements.

RIL succeeded in its bid to sell, transport and deliver 132 TBtu
(means one trillion BTU (British Thermal Unit) or 1000000
MMBTU). NTPC, by letter dated 16.06.2004, confirmed RIL's
deal.
 In June, 2004, RIL entered into a State Support
Agreement with the Government of U.P. to make
necessary arrangements for land, water and other
facilities for Dadri Project.

In a Board Meeting of Reliance Energy Limited (in short

"REL") held on 20.10.2004, which was attended by Mukesh
Ambani and other Directors of RIL, after reviewing the
Dadri Project it was recorded that gas from KG Basin
would be supplied for the power projects of REL. The
Board of REL was assured about the availability of gas, its
timing, adequate quality and requested quantity at a
competitive price for the project.
On 18.06.2005, the media released a statement informing the
general public that an amicable settlement is arrived at in respect of all
disputes between the Ambani Brothers.
It was stated that Mukesh Ambani will take over the responsibility for RIL
and IPCL and Anil Ambani will take over the responsibility for Reliance
Infocomm Ltd., Reliance Energy Ltd. and Reliance Capital Ltd. On the
same day, Anil Ambani resigned as Joint Managing Director of RIL.
Both the brothers with the mediation of their mother Mrs. Kokilaben
Dhirubhai Ambani arrived at a Memorandum of Understanding
(MoU)/family arrangement dated 18.06.2005 and accordingly resolved
their disputes amicably.
Based upon the said MoU, both the brothers and the officials of RIL and
other group companies, made various discussions, exchanged
correspondences, e-mails and held conferences and meetings to
implement the MoU and to resolve the disputes and to divide the various
companies by a Scheme of Arrangement.
The MoU gave RNRL a specified entitlement of oil and gas at the price
at which RIL had agreed to supply gas to NTPC – in short, $2.34/mmBtu.
The Bombay High Court approved the consequent Scheme, which
required that “suitable arrangements” be made for the supply of gas by
RIL to RNRL, and the Scheme became effective on 21 December, 2005.

Following this, the RIL and RNRL Boards (controlled at the time by the
MDA Group) approved a draft Gas Sale Master Agreement [“GSMA”]
and Gas Sale Purchase Agreement [“GSPA”]. Once control was
transferred to the ADA Group, RNRL contended that the GSPA and
GSMA were inconsistent with the scheme. Subsequently, the Ministry of
Petroleum and Natural Gas declined to approve RIL’s request to supply
gas to RNRL at the NTPC price of $2.34/mmBtu. Soon after, RNRL filed an
application in the Bombay High Court requesting the Court to direct RIL
to supply gas at the price agreed in the MoU.
In August 2007, without prejudice to the decision of the
Court, an Empowered Group of Ministers adopted a
price formula that prescribed $4.20 as the ceiling, and
applicable when the cost of oil is $60/barrel or more.
Meanwhile, the Division Bench held that the “suitable
arrangement” in the Scheme had to be formulated in
light of the MoA, and further observed that nothing in
the PSC prevented RIL from selling gas to a third party at
a rate lower than that prescribed by the Union of India.
All three parties – RIL, RNRL and the Union of India –
appealed to the Supreme Court, which heard
arguments for over 26 days.
the most significant issue in the context of the case, the
majority and Justice Reddy agreed that the power of the
Union to distribute natural resources for the good of the
community overrides private agreements. In this respect, the
Court relied on Art. 297 of the Constitution, which vests natural
resources in the Union of India, Art. 39(b), which requires
distribution of resources to subserve the common good,
commercial practice in the oil and gas industry(para 84), the
international principle of permanent sovereignty over natural
resources adopted by the UN General Assembly in Resolution
1803 (para 88), the provisions of the PSC, the doctrine of
public trust (para 97) etc.
RESOURCE SCARCE

RESOURCE CURSE
Reliance Industries Ltd. & Ors vs U.O.I. AIR 2014
SUPREME COURT 2342
APOOINTMENT OF THE THIRD ARBITRATOR
KG BASIN DISPUTE
 FACTUAL MATRIX
The UOI on 12.04.2000, entered into a
Production Sharing Contract with both M/s.
Reliance Industries Limited , who is the
respondent no. 1 and one Niko Limited,
who is the respondent no. 3, in respect of
Block Kg-DWN-98/3 situated in the
Krishna-Godavari Basin off the coast of
Andhra Pradesh with a participating interest
of 90% and 10% respectively.
In the said PSC, RIL and Niko as the ‘contractor’ had the right to take
Cost Petroleum in accordance with the provisions of Article 15 of the
said PSC; the right to take its Participating Interest share of Profit
Petroleum in accordance with the provisions of Article 16 of the same
PSC; the right to receive its Participating Interest share of any
incidental income and receipts arising from Petroleum Operations
and the obligation to contribute its Participating Interest share of cost
and expenses including Contract Cost.

The UOI, also entered into another PSC with one Cairn Energy India
Limited in respected of the Block KG-DWN-98/2 and also with Oil and
Natural Gas Corporation Limited qua Block KG-OS-IG.
Later on, ONGC acquired rights from CEIL qua Block KG-DWN-98/2.
Interestingly, both the Block KG-OS-IG and Block KG-DWN-98/213 5
turned out to be adjoining blocks to the Reliance Block
On 25.09.2000, RIL was granted a Petroleum Exploration
License qua the Reliance Block w.e.f., 07.06.2000 for a period
of seven years, where after, from September 2001 till March
2002, RIL carried out 3D seismic survey in the Reliance Block
and notified it to the UOI.
On 26.11.2002, preliminary results qua Original Gas in Place
was prepared by one M/s. DeGolyer and MacNaughton and
forwarded by RIL to the UOI.
On 26.11.2002, preliminary results qua Original Gas in Place
was prepared by one M/s. DeGolyer and MacNaughton and
forwarded by RIL to the UOI. The above was then followed by
a Final Report by the very same D&M to the Director General
of Hydrocarbons 31.01.2003
It was during the existence of PSC and
though RIL was working in the Reliance
Block and the ONGC was working in the
ONGC Block, certain disputes arose,
whence ONGC addressed a letter dated
22.07.2013 to the UOI stating that there was
“… …evidence of lateral continuity of gas
pools… …” inter-se the Reliance Block and
the ONGC Block i.e., the blocks were
connected and there was migration of gas
inter-se them.
The above led to filing of W.P.(C)
3054/2014 by ONGC before this Court
against the UOI and RIL, primarily
claiming that since the gas reservoirs of
the Reliance Block and the ONGC Block
were interconnected, it resulted in the
migration of natural gas, and that RIL had
been ‘unjustly enriched’ by producing
and selling the migrated gas from the
ONGC Block.
meanwhile, during the pendency of the said
W.P.(C) 3054/2014, ONGC and RIL entered into an
“Agreement for Project Management of
Independent Third-Party Study” without prejudice to
the rights and contentions of the parties under the
PSC, appointing D&M vide letter of Award dated
03.07.2014 to undertake an independent third-party
study of the alleged continuity and migration of
gas, as contended by the ONGC, inter-se, the
Reliance Block and the ONGC Block. The DGH was
also appointed as a ‘Facilitator’ thereof.
Later on, a learned Single Judge of DELHI HIGH
Court vide order dated 10.09.2015, disposed of
the said W.P.(C) 3054/2014 with certain
directions to the parties for co-operating with
D&M and also to furnish all information so
required by the D&M for the study of
connectivity, and furthermore that UOI would
take a decision within a period of six months of
the submission of the D&M Report qua the issue
of alleged connectivity and migration of gas,
as raised by ONGC therein.
the D&M submitted its Final Report dated 19.11.2015
concluding that “the integrated analyses indicated
connectivity and continuity of the reservoirs across the
blocks operated by ONGC and RIL”.

UOI constitutes Shah Committee to consider the D& M

Report and recommend further course of action.

RIL aggrieved by the stand taken by the DGH before the

Shah Committee addressed a letter to the UOI, and
withdrew its participation in the hearings before the said
Shah Committee.
Thereafter, on 29.08.2016 the Shah Committee
issued its Final Report, based whereon, the UOI
raised a Demand Notice, for USD 1,552,071,067.00
as computed provisionally along with interest till
31.03.2016 and of USD 174,905,120.00 towards
revised additional cumulative Profit Petroleum
claimed to be receivable till 31.03.2016, for
disgorgement of unjust enrichment claimed to
have been made by RIL due to the migration of
gas, upon RIL.
 ARBITRAL PROCEEDINGS
In response, RIL, invoking the arbitration clause in terms of Article
33 of the PSC, issued a Notice of Arbitration dated 11.11.2016 to
the UOI. Where after, the 3 member AT was constituted.
Reliefs: -
1. Declaring that Contractor has produced all hydrocarbons from
its Contract Area by conducting Petroleum Operations
reviewed and approved by GOI;
2. Declaring that Contractor has the right to produce all
hydrocarbons from wells drilled in its Contract Area by
conducting Petroleum Operations reviewed and approved by
GOI, which may include hydrocarbons that could have
migrated to those wells from an adjacent block;
…………………………………………
In response thereto, first the UOI filed a simpliciter
Statement of Defense, however, later raised
Counter Claims as well.

Arbitral Award [Majority (2:1)]:

 Issues before the AT
“1) Whether the Claimant’s rights and obligations under the PSC to
conduct Petroleum Operations in the Contract Area prohibit the Claimant
from producing and selling gas which migrated into the subsea reservoir
lying within the Contract Area from a source outside the Contract Area?
2) [If the answer to (1) is “YES”;] Whether the Claimant is obliged to seek
and obtain express permission to produce and sell migrated gas and if
so, whether the Claimant obtained such permission?
3) Whether the Claimant produced and sold gas which migrated into the
sub-sea reservoir lying within the Contract Area from a source outside the
Contract Area. If so, to ascertain quantity?
4) Whether the Claimant produced and sold gas from the
sub-sea reservoir lying within the Contract Area which extends
beyond the Contract Area.
If so, to ascertain quantity?

5) [If the answers to (3) or (4) is “YES”;] Whether the Claimant is

entitled under the PSC to retain or recover:
i. cost petroleum; and/ or
ii. profit petroleum,
from the production and sale of such gas.
6) [If the answer to (5) is “NO”] Whether the
Claimant has been “unjustly enriched”;

7 to 12
Wrt Disclosure of the 2003 D&M Report
 Cost Petroleum vs. Profit Petroleum

Cost Petroleum:

The portion of the total value of Petroleum Produced and Saved

from the Contract Area which the Contractor is entitled to take in a
particular period, for the recovery of Contract Costs as provided in
the Model Production Sharing Contract(MPSC).

Profit Petroleum:

Profit Petroleum means, the total value of Petroleum Produced and

Saved from the Contract Area in a particular period, as reduced by
Cost Petroleum and calculated as provided in the Model Production
Sharing Contract(MPSC).
 AT AWARD
Issue no.1: As per the learned AT there was no express prohibition against RIL from
extracting the migrated gas within the contract area/ development area. Also, that the
UOI may require unitization or a joint development if it takes the view that “… …the
Reservoir can be more efficiently developed together on a commercial basis… …for
securing the more effective recovery of Petroleum from such Reservoir… …”. In effect, the
UOI would not be required to make such an order of joint development until, it is satisfied
that joint development is commercially more efficient. Besides that, the learned AT also
rendered that the terms of the PSC read together with Petroleum and Natural Gas Rules,
1959 make explicit that RIL as the contractor, licensee and lessee, is permitted and
required to extract all available gas within its contract area/ development area for the
benefit of the UOI, even if, such gas has migrated from beyond the Contract Area.
Issue no.2: As per the learned AT, RIL did not need any
further express permission to produce and sell any
migrated gas that could have come into its Contract
Area.

Issue nos.3 and 4: As per the learned AT, there was

connectivity of reservoirs, as such the gas produced
by RIL did include the gas which had migrated into
the reservoir lying within the Contract Area from a
source outside the Contract Area.
Issue no.5: As per the learned AT, RIL was
entitled to all rights granted to it under the PSC. It
was entitled to retain and recover Cost
Petroleum from the gas so extracted, produced
and sold.

Issue no.6: In view of the aforesaid finding in

issue no.5, as per learned AT, RIL was not
‘unjustly enriched’.
SINGLE BENCH- UPHELD THE AEWARD

DOUBLE BENCH- OVERULED THE SINGLE BENCH

JUDGEMENT
[Link]
15/51e75ygr/Union_of_India_Vs_RIL.pdf

PRESENT- RIL V. UOI BEFORE SUPREME COURT OF INDIA

In the facts before us, the issue of ‘patent
illegality’ involves the applicability of the
provisions of Article 297 of the CoI and, since
it involved a vital natural resource, ‘public
policy in India’, ‘public law’ and ‘Public Trust
Doctrine’, would have to be also considered
since, in our considered opinion, they are all
intertwined with each other.
 MC MEHTA VS. UOI,
“25. The Public Trust Doctrine primarily rests on the principle that certain
resources like air, sea, waters and the forests have such a great importance
to the people as a whole that it would be wholly unjustified to make them a
subject of private ownership. The said resources being a gift of nature, they
should be made freely available to everyone irrespective of the status in life.
The doctrine enjoins upon the Government to protect the resources for the
enjoyment of the general public rather than to permit their use for private
ownership or commercial purposes. According to Professor Sax the Public
Trust Doctrine imposes the following restrictions on governmental authority:
“Three types of restrictions on governmental authority are often thought to be
imposed by the public trust : first, the property subject to the trust must not
only be used for a public purpose, but it must be held available for use by
the general public; second, the property may not be sold, even for a fair
cash equivalent; and third the property must be maintained for particular
types of uses.”
RNRL VS. RIL
 We hold that with respect to the natural resources extracted and
exploited from the geographic zones specified in Article 297 the Union
may not:

(1) transfer title of those resources after their extraction unless the Union
receives just and proper compensation for the same;
(2) allow a situation to develop wherein the various users in different
sectors could potentially be deprived of access to such resources;
(3) allow the extraction of such resources without a clear policy
statement of conservation, which takes into account total domestic
availability, the requisite balancing of current needs with those of
future generations, and also India's security requirements;
(4) allow the extraction and distribution without periodic evaluation of
the current distribution and making an assessment of how greater
equity can be achieved, as between sectors and also between
regions;
(5) allow a contractor or any other agency to extract and
distribute the resources without the explicit permission of the
Union of India, which permission can be granted only
pursuant to a rationally framed utilisation policy; and
(6)no end user may be given any guarantee for continued
access and of use beyond a specified period to be specified
by the government
Any contract including a PSC which does not take into its
ambit stated principles may itself become vulnerable and fall
foul of Article 14 of the Constitution.”
 Applicability of Section 37 of the Act qua
‘public policy’ in AC Chokshi Share Broker
Private Limited vs Jatin Pratap DesaI & Anr. The
SC held that
“ The term “public policy” in Section 34(2)(b)(ii)
has been interpreted by this Court as meaning
(a) the fundamental policy of Indian law, or
(b) the interest of India, or
(c) justice or morality. …
In ONGC v. Saw Pipes, this Court further held that an arbitral
award can be set aside as being contrary to public policy if it is
patently illegal. The illegality must go to the root of the matter and
must be so unfair and unreasonable that it shocks the court’s
conscience; it cannot be of a trivial nature. Such patent illegality
includes a situation where the award is in contravention with
substantive law.
Further, an award can be set aside as being opposed to the
“fundamental policy of India” if it is perverse, i.e., the finding is not
based on evidence, or the arbitral tribunal takes something
irrelevant into account, or ignores vital evidence. However, an
award is not perverse if the finding of fact is a possible view that is
based on some reliable evidence.”
RIL was appointed only for a specific and limited purpose.
Moreover, noted hereinabove, such explorations/
extractions will and have to be seen in light of Article 297 of
the CoI, since it is the duty of the State which is being
delegated, and the entity which is carrying on with such a
duty, will be constrained with the same restraints as the
Union and governed by the CoI. In effect, RIL was
supposed to do all those for and on behalf of the UOI, as it
was accountable to the UOI by acting in such a manner
which was in the public interest of the people of this
Country and the UOI. Therefore, the gas coming out of the
Reliance Block as a result of any such extractions belongs
to the UOI, albeit, in terms of the PSC.
Coming to the facts involved herein, it is crucial
to note that it has never been the case of either
of the parties that the UOI ever gave an explicit
and express permission qua the said ‘Migrated
Gas’ or that the RIL received an explicit and
express permission qua extraction of the said
‘Migrated Gas’ that found its way into the
Reliance Block. The case of RIL is that the said
permission, if any, was not compulsorily required
and silence by the UOI meant deemed grant of
permission.
 STAKE

The Ministry of Petroleum and Natural Gas has raised

a demand of USD 2.81 billion on the PSC Contractors,
namely Reliance Industries Limited, BP Exploration
(Alpha) Limited, and NIKO (NECO) Limited. The letter
of demand was received by the company at 11:30
AM on 3 March 2025,” said RIL.

USD 2.81 billion (about Rs 24,500 crore) PLUS INTEREST

etc
THE PETROLEUM AND
MINERALS PIPELINES
(ACQUISITION OF RIGHT
OF USER IN LAND) ACT,
1962
SECTION 2 (c) “petroleum” has the same meaning as in the
Petroleum Act, 1934 (30 of 1934), and includes natural gas
and refinery gas

Facilitates the laying of pipelines for the

transport of petroleum and minerals by
acquiring the "right of user" in land, rather than
acquiring ownership. This enables
infrastructure development while minimizing
disturbance to landowners.
1. SECTION 3- Publication of notification for acquisition.— CENTRAL GOVERNMENT
2. SECTION 4. Power to enter, survey, etc.-
(a) to enter upon and survey and take levels of any land specified in the
notification;
(b) to dig or bore into the sub-soil;
(c) to set out the intended line of work;
(d) to mark such levels, boundaries and line by placing marks and cutting
trenches;
(e) where otherwise survey cannot be completed and levels taken and the
boundaries and line marked, to cut down and clear away any part of any
standing crop, fence or jungle; and
(f) to do all other acts necessary to ascertain whether pipelines can be laid under
the land:
Provided that where exercising any power under this section, such person or any
servant or workmen of such person shall cause as little damage or injury as
possible to such land.
 SECTION 5- HEARING OF OBJECTION
SECTION6- Declaration of acquisition of right of user
SECTION 7- Central Government or State Government or corporation to lay
pipelines.
SECTION 8- Power to enter land for inspection, etc.
SECTION 9- Restrictions regarding the use of land.—
(1) The owner or occupier of the land with respect to which a declaration has
been made under sub-section (1) of section 6, shall be entitled to use the
land for the purpose for which such land was put to use immediately before
the date of the notification under sub-section (1) of section 3:
Provided that, such owner or occupier shall not after the declaration under
sub-section (1) of section 6—
(i) construct any building or any other structure;
(ii) construct or excavate any tank, well, reservoir or dam; or
(iii) plant any tree, on that land.
 STEP BY STEP

[Link] Interest Determination

•The Central Government must determine that
laying pipelines is necessary in the public
interest for transporting petroleum or
minerals.
[Link] of Land
•Specific land parcels under which pipelines
are proposed to be laid are identified.
[Link] in Official Gazette
•A notification is published in the Official Gazette
declaring the Government’s intention to acquire the
right of user in the identified land.
•This notification includes a brief description of the
land.
[Link] Display
•The notification is also published in local newspapers
and displayed at prominent places in the locality to
inform affected landowners and the public.
[Link] Effect
•Once the notification is issued, it becomes lawful for
authorized personnel to:
•Enter the land
•Survey and take levels
•Dig or bore into the subsoil
•Mark boundaries and lines
•Clear crops or vegetation if necessary
•Perform other acts to assess feasibility for pipeline laying
This process ensures transparency and gives affected
parties a chance to raise objections (which are addressed
under Section 5).
SECTION [Link].—(1) Where in the exercise of the powers

conferred by section 4, section 7 or section 8 by any person, any damage,

loss or injury is sustained by any person interested in the land under which

the pipeline is proposed to be, or is being, or has been laid, the Central

Government, the State Government or the corporation , as the case may

be , shall be liable to pay compensation to such person for such damage,

loss or injury , the amount of which shall be determined by the competent

authority in the first instance.

(2) If the amount of compensation determined by the

competent authority under sub-section (1) is not acceptable

to either of the parties, the amount of compensation shall, on

application by either of the parties to the District Judge within

the limits of whose jurisdiction the land or any part thereof is

situated, be determined by that District Judge.

(3) The competent authority or the District Judge while
determining the compensation under sub-section (1)
or sub-section (2), as the case may be, shall have due
regard to the damage or loss sustained by any person
interested in the land by reason of—

(i) the removal of trees of standing crops, if any, on

the land while exercising the power under section 4,
section 7 or section 8;
(ii) the temporary severance of the land under which the pipeline has
been laid from other lands belonging to, or in the occupation of, such
person; or

(iii) any injury to any other property, whether movable or immovable ,

or the earnings of such persons caused in any other manner:

Provided that in determining the compensation no account shall be

taken of any structure or other improvement made in the land after the
date of the notification under sub-section (1) of section 3.
(4) Where the right of user of any land has vested in the Central
Government, the State Government or the corporation , the
Central Government, the State Government or the corporation , as
the case may be, shall, in addition to the compensation, if any,
payable under sub-section (1), be liable to pay to the owner and
to any other person whose right of enjoyment in that land has
been affected in any manner whatsoever by reason of such
vesting, compensation calculated at ten per cent. of the market
value of that land on the date of the notification under sub-section
(1) of section 3.
(5) The market value of the land on the said date shall be
determined by the competent authority and if the value so
determined by that authority is not acceptable to either of
the parties, it shall, on application by either of the parties to
the District Judge referred to in sub-section (2), be
determined by that District Judge.

(6) The decision of the District Judge under sub-section (2)

or sub-section (5) shall be final.
14. Bar of jurisdiction
of civil courts.

15. Penalty-
IMPRISONMENT/FINE/
BOTH
 COGNIZABLE AND NON-BAILABLE OFFENCE

15(2) Whoever wilfully makes or causes to make any

unauthorised connection with or removes, destroys,
damages or displaces any pipeline laid under section 7, or
wilfully inserts any device to extract petroleum product or
minerals from such pipeline, or wilfully disrupts supplies being
made through the pipeline, shall be punishable with rigorous
imprisonment for a term which may extend to ten years and
shall also be liable to fine.
15(3) If any person convicted of an offence under
sub-section (2) is again convicted of an offence under the
same provision, he shall be punishable with rigorous
imprisonment for the second and for every subsequent
offence for a term which shall not be less than three years
but which may extend to ten years: Provided that the court
may, for any adequate and special reasons to be
mentioned in the judgment, impose a sentence of
imprisonment for a term of less than three years.
(4) Whoever, with the intent to cause or knowing that he is
likely to cause damage to or destruction of any pipeline laid
under section 7, causes by fire, explosive substance or
otherwise damage to the pipeline being used for
transportation of petroleum products, crude oil or gas with
the intent to commit sabotage or with the knowledge that
such act is so imminently dangerous that it may in all
probability cause death of any person or such bodily injury
likely to cause death of any person, shall be punishable with
rigorous imprisonment which shall not be less than ten years
but may extend to imprisonment for life or death.
 Laljibhai Kadvabhai Savaliya v. State of Gujarat 2016 (9) SCC 791

Issue: Whether the acquisition of "right of user" amounts to full land

acquisition.

Reinforced the distinction between this Act and the Land Acquisition Act,

protecting landowners from complete dispossession.

Ruling: The Supreme Court clarified that the Act does not transfer

ownership—only a limited right to lay and maintain pipelines.

Landowners retain title, but usage is restricted.

 Petronet Cck Ltd vs [Link]
K.V. Varghese owned approximately 2 acres of
dry land planted with valuable trees, including 65
yielding rubber trees, one teak tree, three
cashew trees, and others.
For pipeline laying, Petronet CCK Ltd acquired
only the "user right" over 0.1195 hectares
(schedule 'B') of this land, cutting and removing
the trees.
Varghese challenged the initial compensation
awarded by the Competent Authority under
Section 10(1) of the Act as too low and sought
redress in District Court under Section 10(2).
Calculation of Compensation: The
court considered compensation
for trees cut, as well as "diminution
in land value"—the reduction in
value of the residual property
after the right of user was
acquired for pipeline laying.
Petronet Cck Ltd vs Thresiamma on 11 January,
2012 AIR 2012 (NOC) 327 (KER.)
DGH--- Directorate General of Hydrocarbons

Was established in 1993 under the administrative

control of Ministry of Petroleum & Natural Gas
through Government of India Resolution.

Objectives of DGH are to promote sound

management of the oil and natural gas resources
having a balanced regard for environment,
safety, technological and economic aspects of
the petroleum activity.
DGH has been entrusted with several responsibilities like implementation of New

Exploration Licensing Policy (NELP), matters concerning the Production Sharing

Contracts for discovered fields and exploration blocks, promotion of investment in E

and P Sector and monitoring of E and P activities including review of reservoir

performance of producing fields. In addition, DGH is also engaged in opening up of

new unexplored areas for future exploration and development of non-conventional

hydrocarbon energy sources like Coal Bed Methane(CBM) as also futuristic

hydrocarbon energy resources like Gas Hydrates and Oil Shales.

A nodal agency for implementation of NELP and CBM policy on behalf
of Ministry of Petroleum & Natural Gas
To advise Ministry of Petroleum & Natural Gas on Exploration Strategies
& Production Policies
To provide technical advice to the Ministry of Petroleum and Natural
Gas on issues relevant to the exploration and optimal exploitation of
hydrocarbons in the country
To review the exploration programs of companies operating under
Petroleum Exploration Licenses granted under the Oilfields (Regulation
and Development) Act, 1948 and the Petroleum and Natural Gas Rules,
1959 with a view to advising Government on the adequacy of these
programs.
To evaluate the hydrocarbon reserves discovered and estimated by
the operating companies
To advise the Government on the offering of acreages for exploration
to companies as well as matters relating to relinquishment of acreage
by companies
To review the development plans for commercial discoveries of
hydrocarbon reserves proposed by the operating companies and
advise Government on the adequacy of such plans and the
exploitation rates proposed and matters relating thereto
To review and audit concurrently the management of petroleum
reservoirs by operating companies and to advise on any mid-course
correction required to ensure sound reservoir management practices
in line with the optimal exploitation of reserves and the conservation
of petroleum resources
To regulate the preservation, upkeep and storage of data and
samples pertaining to petroleum exploration, drilling, production of
reservoirs etc. and to cause the preparation of data packages for
acreage on offer to companies
All other matters incidental thereto and such other
functions as may be assigned by Government
from time to time
Assist Government in Contract management
functions
Exploration & Development of unconventional
hydrocarbon resources like Gas Hydrate, Shale
Gas/Oil and Oil Shale
Issue Essentiality Certificate for indigenous
procurement of goods used in E&P sector to avail
GST concessions
 E&P Data Management
Brief account of different data classes available with DGH.
Cultural Data
Geological Data
Petrophysical Data
Seismic Data
Well Data
Production Data
Reservoir Data
Various Unstructured Data (Reports, Documents

Bulk Seismic Data Management

THE PETROLEUM AND NATURAL
GAS REGULATORY BOARD ACT,
2006 ACT NO. 19 OF 2006
(PNGRB ACT, 2006)
An Act to provide for the establishment of Petroleum
and Natural Gas Regulatory Board to regulate
❑ the refining,
❑ processing,
❑ storage,
❑ transportation,
❑ distribution,
❑ marketing and sale
of petroleum, petroleum products and natural gas
excluding production of crude oil and natural gas
so as to protect the interests of
consumers and entities engaged in
specified activities relating to petroleum,
petroleum products and natural gas and
to ensure uninterrupted and adequate
supply of petroleum, petroleum products
and natural gas in all parts of the country
and to promote competitive markets
and for matters connected therewith or
incidental thereto.
SECTION 3- PETROLEUM AND NATURAL GAS
REGULATORY BOARD

The Board shall be a body corporate by the

name aforesaid, having perpetual succession
and a common seal, with power, subject to
the provisions of this Act, to acquire, hold and
dispose of property, both movable and
immovable, and to contract, and shall, by the
said name, sue or be sued.
(3) The Board shall consist of a Chairperson,
a Member (Legal) and three other members
to be appointed by the Central
Government.

(4) The head office of the Board shall be at

New Delhi and regional offices at such
places as the Board may deem necessary
having regard to public interest and
magnitude of the work.
4. Qualifications for appointment of Chairperson
and other members.—
Constitute a Search Committee consisting of—
(i) Member, Planning Commission in charge of the energy
sector-Chairperson;
(ii) Secretary to the Government of India, Ministry of Petroleum and
Natural Gas-Member;
(iii) Secretary to the Government of India, Ministry of Finance, Department
of Economic AffairsMember;
(iv) Secretary to the Government of India in charge of Commerce,
Ministry of Commerce and Industry-Member; and
(v) Secretary to the Government of India, Department of Legal Affairs,
Ministry of Law and Justice-Member.
6. Powers of Chairperson.—The
Chairperson shall have the powers of
general superintendence and directions
in the conduct of the affairs of the Board
and shall, in addition to presiding over the
meetings of the Board, exercise and
discharge such other powers and
functions of the Board, as may be
assigned to him by the Board.
 7. Removal of Chairperson or any other member
from office.-------------
(a) has been adjudged as insolvent; or
(b) has been convicted of an offence which, in the opinion of
the Central Government, involves moral turpitude; or
(c) has become physically or mentally incapable of acting as
a member; or
(d) has acquired such financial or other interest as is likely to
affect prejudicially his functions as a member; or
(e) has so abused his position as to render his continuance in
office prejudicial to the public interest:
PROVISO- (d) and (e) require inquiry
 11. Functions of the Board.—
The Board shall—
(a) protect the interest of consumers by fostering fair trade
and competition amongst the entities;
(b) register entities to—
(i) market notified petroleum and petroleum products and,
subject to the contractual obligations of the Central
Government, natural gas;
(ii) establish and operate liquefied natural gas terminals;
(iii) establish storage facilities for petroleum, petroleum
products or natural gas exceeding such capacity as
may be specified by regulations;
(c) authorise entities to—
(i) lay, build, operate or expand a
common carrier or contract carrier;
(ii) lay, build, operate or expand city or
local natural gas distribution network;

(d) declare pipelines as common carrier

or contract carrier;
 (e) regulate, by regulations,—
(i) access to common carrier or contract carrier
so as to ensure fair trade and competition
amongst entities and for that purpose specify
pipeline access code;
(ii) transportation rates for common carrier or
contract carrier;
(iii) access to city or local natural gas distribution
network so as to ensure fair trade and
competition amongst entities as per pipeline
access code;
 (f) in respect of notified petroleum, petroleum products and
natural gas—
(i) ensure adequate availability;
(ii) ensure display of information about the maximum retail prices
fixed by the entity for consumers at retail outlets;
(iii) monitor prices and take corrective measures to prevent
restrictive trade practice by the entities;
(iv) secure equitable distribution for petroleum and petroleum
products;
(v) provide, by regulations, and enforce, retail service obligations
for retail outlets and marketing service obligations for entities;
(vi) monitor transportation rates and take corrective action to
prevent restrictive trade practice by the entities;
(g) levy fees and other charges as determined by regulations;
(h) maintain a data bank of information on activities relating
to petroleum, petroleum products and natural gas;
(i) lay down, by regulations, the technical standards and
specifications including safety standards in activities relating
to petroleum, petroleum products and natural gas, including
the construction and operation of pipeline and infrastructure
projects related to downstream petroleum and natural gas
sector;
(j) perform such other functions as may be entrusted to it by
the Central Government to carry out the provisions of this Act.
 12. Powers regarding complaints and resolution of
disputes by the Board.—
(1) The Board shall have jurisdiction to—
(a) adjudicate upon and decide any dispute or
matter arising amongst entities or between an entity
and any other person on issues relating to refining,
processing, storage, transportation, distribution,
marketing and sale of petroleum, petroleum products
and natural gas according to the provisions of
Chapter V, unless the parties have agreed for
arbitration;
 (b) receive any complaint from any person and conduct any inquiry
and investigation connected with the activities relating to petroleum,
petroleum products and natural gas on contravention of—
(i) retail service obligations;
(ii) marketing service obligations;
(iii) display of retail price at retail outlets;
(iv) terms and conditions subject to which a pipeline has been declared
as common carrier or contract carrier or access for other entities
was allowed to a city or local natural gas distribution network, or
authorisation has been granted to an entity for laying, building,
expanding or operating a pipeline as common carrier or contract
carrier or authorisation has been granted to an entity for laying,
building, expanding or operating a city or local natural gas
distribution network;
(v) any other provision of this Act or the rules
or the regulations or orders made thereunder.

(2) While deciding a complaint under

sub-section (1), the Board may pass such
orders and issue such directions as it deems
fit or refer the matter for investigation
according to the provisions of Chapter V.
 13. Procedure of the Board.—(1) The Board shall have, for the purposes of
discharging its functions under this Act, the same powers as are vested in
a civil court under the Code of Civil Procedure, 1908 (5 of 1908), while
trying a suit, in respect of the following matters, namely:—
(a) summoning and enforcing the attendance of any person and
examining him on oath;
(b) subject to the provisions of sections 123 and 124 of the Indian Evidence
Act, 1872 (1 of 1872), requisitioning any public record or document or
a copy of such record or document, from any office and production of
such documents;
(c) receiving evidence on affidavits;
(d) issuing commissions for the examination of witnesses or documents;
(e) dismissing an application for default or deciding it, ex parte;
(f) setting aside any order of dismissal of any application for default or
any order passed by it, ex parte;
 (g) granting interim relief;
(h) reviewing its decision; and
(i) any other matter which may be prescribed.
(2) Every proceeding before the Board shall be deemed to be
a judicial proceeding within the meaning of sections 193 and
228, and for the purposes of section 196, of the Indian Penal
Code (45 of 1860) and the Board shall be deemed to be a
civil court for the purposes of section 195 and Chapter XXVI of
the Code of Criminal Procedure, 1973 (2 of 1974).
(3) The Board shall be guided by the principles of natural
justice and subject to other provisions of this Act and of any
rules made thereunder, shall have powers to regulate its own
procedure including the places at which it shall conduct its
business.
 14. Register.—(1) For the purposes of this Act, a register to be called
the Petroleum and Natural Gas Register shall be kept at the head
office of the Board containing such details of entities—
(a) registered for—
(i) marketing notified petroleum, petroleum products or natural gas,
or
(ii) establishing and operating liquefied natural gas terminals, or
(iii) establishing storage facilities for petroleum, petroleum products or
natural gas exceeding such capacity as may be specified by
regulations, or
(b) authorised for—
(i) laying, building, operating or expanding a common carrier, or
(ii) laying, building, operating or expanding a city or local natural gas
distribution network, as may be provided by the Board by
regulations.
(2) A copy of any entry in the register purporting to
be maintained by the Board and certified as such by
an officer authorised by the Board, shall be admitted
in evidence in all courts and in all proceedings
without further proof or production of the original.
(3) The register shall be open to public inspection at
the head office of the Board.
(4) Any person may, on application to the Board,
and on payment of such fee as may be determined
by the Board, by regulations, obtain a certified copy
of any entry in the register.
 15. Registration of entities :-
(1) Every entity desirous of-
(a) marketing any notified petroleum or petroleum products or natural
gas; or
(b) establishing or operating a liquefied natural gas terminal; or
(c) establishing storage facilities for petroleum, petroleum products or
natural gas exceeding such capacity as may be specified by
regulations, and fulfilling the eligibility conditions as may be
prescribed shall make an application to the Board for its
registration under this Act: Provided that no registration under this
Act shall be required for any entity carrying on any activity referred
to in clause (a) or clause (b) or clause (c) immediately before the
appointed day but shall inform the Board about such activity within
six months from the appointed day.
 16. Authorisation :- No entity shall-
(a) lay, build, operate or expand any pipeline as a common carrier or
contract carrier,
(b) lay, build, operate or expand any city or local natural gas distribution
network, without obtaining authorisation under this Act :
Provided that an entity :-
(i) laying, building, operating or expanding any pipeline as common
carrier or contract carrier; or
(ii) laying, building, operating or expanding any city or local natural gas
distribution network, immediately before the appointed day shall be
deemed to have such authorisation subject to the provisions of this
Chapter, but any change in the purpose or usage shall require
separate authorisation granted by the Board.
28. Civil penalty for
contravention of directions
given by the Board

29. Orders passed by Board

deemed to be decrees
 37. Appeal to Supreme Court----
(1) Notwithstanding anything contained in the Code of Civil Procedure,
1908 (5 of 1908) or in any other law, an appeal shall lie against any
order, not being an interlocutory order, of the Appellate Tribunal to
the Supreme Court on one or more of the grounds specified in
section 100 of that Code.
(2) No appeal shall lie against any decision or order made by the
Appellate Tribunal with the consent of the parties.
(3) Every appeal under this section shall be preferred within a period of
ninety days from the date of the decision or order appealed against
: Provided that the Supreme Court may entertain the appeal after
the expiry of the said period of ninety days, if it is satisfied that the
appellant was prevented by sufficient cause from preferring the
appeal in time.
Petroleum and Natural Gas
Regulatory Board (Guiding
Principles for Declaring or
Authorizing Petroleum or
Petroleum Product as Common
Carrier or Contract Carrier)
Regulations, 2010
CONTRACT CARRIER
A contract carrier system implies that the capacity in petroleum or
petroleum product pipeline, over and above the entity's own
requirement, shall be available to any other entity or customer
subject to the latter entering into a contract for transportation of
quantity of petroleum or petroleum product for a period of
minimum one year, on such other terms and conditions as may be
mutually agreed, subject to the provisions of regulations notified
from time to time under the Act and the entity or customer
agreeing to pay petroleum or petroleum product pipeline tariff as
authorized under the Petroleum and Natural Gas Regulatory Board
(Determination of Petroleum or Petroleum Product Pipeline Tariff)
Regulations, 2010.
Common carrier system for petroleum
or petroleum product pipelines.
A common carrier system implies that the capacity in a
petroleum or petroleum product pipeline, over and above the
entity's own requirement, shall be available to an entity or
customer subject to the latter entering into a contract for
transporting quantity of petroleum or petroleum products for a
period of less than one year, on such other terms and
conditions as may be mutually agreed, and subject to the
provisions of regulations notified from time to time under the
Act and the entity or customer agreeing to pay petroleum or
petroleum product pipeline transportation tariff as authorized
under the Petroleum and Natural Gas Regulatory Board
(Determination of Petroleum or Petroleum Product Pipeline
Tariff) Regulations, 2010.
Provided that if the common carrier capacity is not
fully utilized, the entity may contract the same for a
period of one year or more, subject to the stipulation
that in case another customer seeks booking of the
same for a period of less than one year, the request
shall be accommodated after pro-rating the same
from the common carrier capacity already
contracted to other entities for a period of one year or
more.
Provided further that pro-rating the common carrier
capacity shall not exceed ten per cent of the total
common carrier capacity.
Explanation- For the purpose of these
regulations, entity laying, building,
operating or expanding a common
carrier or contract carrier petroleum or
petroleum product pipeline shall have
right of first use for its own and its
affiliates' requirement.
Such right of first use shall not be
deemed to be preferential access.
(c) Common carrier capacity available in petroleum or
petroleum product pipeline at any given point in time, shall
be allocated to any other entity or customer seeking booking
of the same on a non-discriminatory "first-come-first-served"
basis.
(d) In case common carrier capacity is not available in
petroleum or petroleum product pipeline at any given point
of time and an entity or customer seeks booking of the same,
the request shall be accepted, after pro-rating the same from
the common carrier capacity already allocated to other
entities or customers on common carrier basis.
Provided that pro-rating the common carrier capacity shall
not exceed ten per cent of the total common carrier
capacity.
Common Carrier Contract Carrier
A pipeline available for use by multiple A pipeline used by specific entities based
entities on a non-discriminatory basis on firm contracts

Must allow third-party access under Access is restricted to contracted parties

regulated terms only

Subject to PNGRB’s Access Code and tariff Tariffs and terms are governed by private
regulations contracts, but still under PNGRB’s purview

Promotes fair competition and avoids Ensures dedicated service for specific
monopolistic control commercial arrangements

PNGRB has the power to declare any PNGRB also authorizes contract carriers
pipeline as common or contract carrier based on submitted applications
 GAIL (India) Ltd. v. Petroleum and Natural
Gas Regulatory Board (PNGRB) (2017) 14 SCC 566
- PNGRB issued regulations under the PNGRB Act, 2006, including provisions
that allowed it to fix transportation tariffs for natural gas pipelines.
- GAIL challenged the authority of PNGRB, arguing that the Board did not
have jurisdiction to regulate tariffs for pipelines that were not declared as
“common carriers” or “contract carriers.”
Legal Issues
Whether PNGRB had the power to fix tariffs for pipelines owned by
entities like GAIL that were not classified as common or contract carriers.
Whether such regulatory actions violated the statutory framework of the
PNGRB Act.
- This judgment clarified the limits of PNGRB’s regulatory
powers, especially in relation to private infrastructure.
- It reinforced the principle that statutory bodies must act
strictly within the bounds of their enabling legislation.
The Court held that PNGRB does not have the authority to fix
transportation tariffs for pipelines that are not declared as
common or contract carriers.
It emphasized that Section 20 of the PNGRB Act limits the
Board’s jurisdiction to pipelines that have been officially notified as
common or contract carriers.
The impugned regulations were declared ultra vires (beyond
legal power) of the PNGRB Act.
This meant that private pipeline owners retained
control over pricing and access unless their
infrastructure was formally designated under PNGRB’s
jurisdiction.
Petroleum and Natural Gas Regulatory Board v.
Indraprastha Gas Ltd. (2015) 9 SCC 209
The Petroleum and Natural Gas Regulatory Board (PNGRB) issued an order under Section 22 of
the PNGRB Act, 2006, fixing:
- Network tariff: ₹38.58 per MMBtu
- Compression charges for CNG: ₹2.75 per kg

•These charges were applied retrospectively from April 1, 2008 to Indraprastha Gas Ltd. (IGL), which
operated its own city gas distribution (CGD) network in Delhi.

• IGL CHALLENGED THIS

 LEGAL ISSUES
Does PNGRB have the power to fix or
regulate network tariffs and compression
charges for entities with exclusive distribution
networks?
Can PNGRB mandate disclosure of tariff
components to consumers?
Are the 2008 Regulations ultra vires the
PNGRB Act?
 SUPREME COURT VERDICT
The Court upheld the Delhi High Court’s decision,
ruling that:
PNGRB does not have the power to fix or regulate
the maximum retail price, network tariff, or
compression charges for entities like IGL that own
their distribution networks.
The relevant portions of the 2008 Regulations were
declared ultra vires the PNGRB Act.
PNGRB can monitor prices and prevent restrictive
trade practices, but cannot impose pricing controls.
 IMPACT & SIGNIFICANCE
This judgment clarified the limits of PNGRB’s
regulatory authority.
It reinforced the principle that statutory bodies
must act within the scope of their enabling
legislation.
The decision protected market autonomy for
entities with exclusive infrastructure, while
preserving consumer safeguards through
oversight—not price control.
CITY GAS DISTRIBUTION
Petroleum & Natural Gas Regulatory Board is an
apex body to develop Natural Gas based City Gas
Eco-system. PNGRB invites bidding to lay, built and
operate City Gas Distribution in Indian for cities.
PNGRB is selecting cities considering proximity of
cross country natural gas pipe line or availability of
LNG terminal. Few cities have considered keeping
future connectivity with proposed cross country
Natural Gas pipe line.
 Bio Compressed Gas (BCG)
Biological waste is generating methane along with few other organic and inorganic
gases. Generation of methane Gas from biological waste like agricultural waste,
press mud, manure, municipal waste, plant material, sewage, green waste or food
waste, animal waste, waste collected in STP plants, is known as Bio Gas. In India,
initially, it was also known as “Gobar Gas”.
Biogas is produced by anaerobic digestion with methanogen or anaerobic
organisms, which digest material in a controlled and closed system, or fermentation
of biodegradable materials. This controlled system is called an anaerobic digester,
biodigester or a bioreactor. With the help of improved biological techniques,
fermentation may be increased for better yield.
Bio Gas is a mixture of various gases primarily consisting of methane, ethane,
moister, Hydrogen Sulfide and carbon dioxide. Along with methane as hydro
carbon, presence of inorganic gases reduce the quality of Bio Gas. The
gases methane, hydrogen, and carbon monoxide (CO) can be combusted or
oxidized with oxygen. This energy release allows biogas to be used as a fuel. It can
be used for any combustion/heating purpose, such as cooking or as fuel in a gas
engine to convert the energy in the gas into electricity and heat.
 Public Notice for bidding
PNGRB issues a public notice with the name of various GA with related
information.
Online procurement of Bid
Bid for specific GA can be purchased online with submission of required
details.
Eligibility Criteria
PNGRB allow bidder with minimum eligibility criteria to full fill to qualify the
bid.
Technical bid
Technical bid requires various expertise required for bid like functional
expertise, past and relevant experience and many more.
Commercial Bid
To win a GA, PNGRB want commitment to achieve with numbers in
commercial bid.
 Bid submission
In a particular date and in time complete bid need to be submitted.
Technical Bid opening
Opening of technical bid is based on qualification criteria and other
required details and documents.
Commercial Bid opening
Out of five, three criteria of quoted by bidder in commercial bid are
considered om highness and two are on lowness. Collectively a
comparison is made to evaluate winner of bid.
Authorization allotment
Amount all bidder, Authorization issues to successful bidder.
PNGRB Drives Consumer Protection and
Sustainable Energy Transition 18TH MARCH
2025

Presently over 1.44 crore households are using

Domestic PNG connections, 7,594
Compressed Natural Gas (CNG) stations are
fuelling approx. 81.1 lakh CNG Vehicles pan
India, 45,119 Commercial establishments and
20,287 Industries are using this clean fuel.
High Level Expert Committee (HLEC)
tasked with reviewing the existing
consumer protection guidelines in the
oil and gas sector and
recommending a comprehensive
consumer protection framework in
alignment with the provisions of the
PNGRB Act, 2006.
 COMPLAINTS REDRESSAL MECHANISM

In a move to monitor consumer complaint redressal

mechanism as well as redressal time period, CGD entities
are now mandated to report monthly consumer complaint
numbers on the PNGRB E-portal. This initiative enables
monitoring of complaint volumes and resolution timeframe.
Additionally, PNGRB has introduced a dedicated
grievance escalation email, providing consumers with an
additional platform to escalate their grievance, if not
resolved by the entities. Regular analysis of complaint data
helps identify trends and shall foster improvement in service
delivery.
YEARLY CONSUMER SATISFACTION SURVEYS
To gain an insight on satisfaction level
of consumers and effectiveness of
entities grievance redressal
mechanism, it has been decided to
conduct Consumer Satisfaction
Surveys (CSS) for matured
Geographical Areas (GA’s).
 Insurance for CGD Consumers
The scheme provides financial coverage in case of
accidents or loss of life or limb. Once fully implemented,
CGD consumers across India will benefit from
comprehensive insurance coverage, including protection
against third-party or collateral damage, akin to the
provisions available for LPG consumers. The CGD entities
have unanimously consented to implement the same. This
initiative exemplifies PNGRBs commitment towards
consumers for providing financial relief in case of any
exigencies / untoward incidents.
 STANDARDIZED BILLING
To ensure transparency and simplify PNG bills,
entities in the CGD sector are now mandated to
adopt standardized billing practices. Consumers will
now receive comprehensible bills that include
detailed breakdowns of charges, making it easier for
them to understand their consumption and
associated costs. This standardization promotes
accountability among service providers and
empowers consumers to make informed decisions
regarding their gas usage.
 CONSUMER AWARENESS CAMPAIGNS

Aim to inform consumers about their

rights, safety practices, and the proper
use of PNG and CNG. By empowering
consumers with knowledge, PNGRB is
fostering a culture of safety and
responsibility.
 SUGGESTED DOCUMENTARIES

GASLAND (2010)- IMPACT OF hydraulic fracturing

(fracking) in the U.S.
The Power of Big Oil--- a three-part series examining
the fossil fuel industry's role in the climate change
crisis;
Ticking time bombs - What risk do abandoned oil
and gas wells pose?