PETROLEUM AND NATURAL GAS RULES, 1959
(1) These rules may be called the Petroleum and Natural Gas Rules, 1959.
(2) They shall come into force on the 25th day of November, 1959.
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1. Vide G.S.R. 1288, dated the 24th November, 1959, published in the Gazette of India, Extra., Pt. II, Sec. 3(i), p. 773.
Nothing in these rules shall affect the provisions of the Petroleum Act, 1934 (30 of 1934), or the rules made thereunder.
In these rules, unless the context otherwise requires,—
(a) “bore-hole” includes an oil well or gas well;
1[***]
2[(ab) “coal bed methane” means natural gas obtained from bore holes occurring to coal or lignite seams and consisting primarily of hydrocarbons;
(ac) “condensate” means those low vapour pressure hydrocarbons obtained form natural gas through condensation of extraction which are in the form of liquid at normal surface temperature and pressure conditions;
(ad) “continental shelf” shall have the same meaning as assigned to it in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and Other Maritime Zones Act, 1976 as amended from time to time;
No person shall prospect for petroleum except in pursuance of a petroleum exploration licence (hereinafter referred to as a licence) granted under these rules and no person shall mine petroleum except in pursuance of a petroleum mining lease (hereinafter referred to as a lease) granted under these rules. Every holder of a licence and every holder of a lease shall in these rules be referred to as the licensee and the lessee, respectively.
[(1) A licence or lease in respect of—
(i) any land or mineral underlying the ocean within the territorial waters or the continental shelf 3[or the exclusive economic zone] of India and vested in the Union, shall be granted by the Central Government, and
4[(ii) any land vested in a State Government, shall be granted by the State Government with the previous approval of the State Government.]]
(2) Every licence and lease shall contain such of the terms, covenants and conditions prescribed by these rules as are applicable and such additional terms, covenants and conditions as may be provided in the agreement between the Central Government and the licensee or the lessee:
Provided that 5[where the licence or lease has been or is to be g
A fee amounting to (i) 1[Rs. 25000 (Rupees twenty five thousand)] in the case of a licence, and (ii) 1[Rs. 50,000 (Rupees fifty thousand)] in the case of a lease, shall be paid 2[to the Central Government or the State Government, as the case may be] by the licensee or the lessee prior to the formal grant of a licence or a lease.
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1. Subs. by G.S.R. 295(E), dated 1st April, 2003.
2. Subs by G.S.R. 371, dated 9th March, 1966.
Subject to the Act or any rules made thereunder and subject also to terms of the agreement that may be 1[arrived at between the Central Government and the licensee or the lessee or, where the land is vested in a State Government between the Central Government and the licensee or lessee after consultation with the State Government].
(i) every licensee shall have the exclusive right to carry out, in addition to geological and geophysical surveys, information drilling and test-drilling operations for petroleum in the area covered by the licence and shall have the exclusive right to a lease to a lease over such part of the 2[area] covered by the licence as he may desire;
(ii) every lessee shall have the exclusive right to conduct mining operations for petroleum and natural gas in and on the land demised by such lease toget
Rule 8 omitted by G.S.R. 339, dated 26th February, 1965.
Every licence and every lease shall be effective from the date specified in this behalf in the licence or the lease.
The area covered by licence shall be specified therein and the licence shall in the first instance be valid for a period of four years, which may be extended for 2[***] further periods of one year each 3[till the expiry of the exploration period(s) provided under the agreement if any, or unless otherwise specified by the Central Government in this regard.]
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1. Subs. by G.S.R. 867, dated 29th September, 1987 (w.e.f. 21-11-1987).
2. Omitted by G.S.R. 813, dated 16th December, 2004 (w.e.f. 16-12-2004).
3. Ins. by G.S.R. 295(E), dated 1st April, 2003.
(1) 1[2[***] The applicant for a licence shall,] before the licence is granted to him, deposit with 1[the Central Government or where the licence is to be or has been granted by the State Government, the State Government] as security for due observance of the terms, covenants and conditions of the licence, a sum of 3[Rs. 1,00,000 (Rupees one lakh).]
4[(2) 2[***], the licensee shall pay yearly in advance by way of licence fee in respect of his licence a sum calculated for each square kilometre or part thereof covered by the licence at the following rates:—
3[(i) Rs. 50 (Rupees fifty) for the first year licence.
(ii) Rs. 100 (Rupees one hundred) for the second year licence.
(iii) Rs. 500 (Rupees five hundred) for the third yea
The area covered by a lease shall ordinarily be 2[250 square kilometers] and the term of a lease shall ordinarily be twenty years:
3[Provided that the Central Government may, if satisfied that it is necessary in public interest so to do, by notification, relax the condition regarding area of aforesaid, in relation to any application for lease.]
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1. Omitted by G.S.R. 152(E), dated 27th March, 1996 (w.e.f. 27-3-1996).
2. Subs. by G.S.R. 842, dated 30th May, 1964.
3. Ins. by G.S.R. 295(E), dated 1st April, 2003.
(1) 1[2[***] The applicant for a lease shall,] before the lease is granted to him,—
(a) deposit with 1[the Central or the State Government, as the case may be] as security, a sum of 3[Rs. 2,00,000 (Rupees two lakh)], for due observance of the terms and conditions of the lease;
1[(b) also deposit with the Central Government or the State Government, as the case may be, for meeting the preliminary expenses such sum, not exceeding 3[Rs. 30,000 (rupees thirty thousand)], as the Central Government or the State Government with the approval of the Central Government, may determine;]
(2) 1[2[***] On the grant of a lease, the lessee],—
(a) shall pay 1[to the Central Government or the State Government, as the case may be] for every year
(1) (a) Notwithstanding anything in any agreement, a lessee shall—
(i) where the lease has been granted by the Central Government, pay to that Government, and
(ii) where the lease has been granted by the State Government, pay to that Government, 2[a royalty in respect of any mineral oil mined, quarried excavated or collected by him from the leased area at the rate specified in Schedule of the Act from time to time. The royalty shall be payable on monthly basis, as may be provided for in the lease and shall be paid by the last day of the month succeeding the period in respect of which it is payable]:
Provided that the Central Government or, as the case may be, the State Government with the approval of the Central Government, may direct that such royalty be paid in petroleum a
If at the time of the grant, or at any time during the term, of a lease, the State Government is of the opinion that survey or re-survey 1[a fee of Rs. 10,000 (Rupees ten thousand)] of the land covered by such lease or any part of such land is necessary, such land or part thereof shall be surveyed by a qualified surveyor and the lessee shall within the period specified by the State Government pay to the State Government, for such survey or re-survey 1[a fee of Rs. 10,000 (Rupees ten thousand)] such fee as the State Government may, with the approval of the Central Government, determine.
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1. Ins. by G.S.R. 295(E), dated 1st April, 2003.
[(1)] The licensee or the lessee shall not assign or transfer his right, title and interest in respect of the licence or the lease or 2[in respect of the land or mineral underlying the ocean within the territorial waters or the continental shelf of India covered by such licence or lease granted by the Central Government, without the consent in writing of the Central Government, and in the case of land covered by a licence or lease granted by the State Government, without the consent in writing of the Central Government being first obtained through the State Government:]
1[Provided that in case where a contract has been signed between the licensee/lessee and the Central Government, the transfer or the assignment, as the case may be, shall be governed by the terms and conditions of the contract, and will be effected in the manner laid down in such contract.
(1) In the case of a national emergency in respect of petroleum, the Central Government shall, at all times, during such emergency, have the right of pre-emption of the refined petroleum or petroleum products produced from the crude oil or natural gas extracted from the area held under a lease, or of the crude oil or natural gas where the lessee is permitted to sell, export or dispose of it without its being refined within India: provided that the fair market price prevailing at the time of pre-emption shall be paid to the lessee by the Central Government, for the petroleum or petroleum products or the crude oil or natural gas taken in pre-emption.
(2) The Central Government shall be the sole judge as to what constitutes a national emergency in respect of petroleum, and its decision in this respect shall be final.
The licensee or the lessee shall—
(a) maintain in good repair and condition all apparatus, appliances and wells capable of producing petroleum on the 1[area] covered by the licence or the lease;
(b) execute all prospecting or mining operations on such 1[area] in a proper and workmanlike manner in accordance with such methods and practice as are customarily use in modern oilfield practice and abide by all instructions, directions and orders that may be give pursuant to any rules under Chapter VI; and
(c) upon the determination of the licence or the lease or upon the relinquishment of any’ area covered by it shall furnish to the Central Government 2[where a licence or lease is granted by that Government and to the Central Government through the State Government where a
(1) Nothing contained in these rules or the terms of a licence or a lease or a contract will give right to a licensee or a lessee to use, sell or otherwise dispose of Helium which may be produced with natural gas and the licensee/lessee shall dispose of such helium in accordance with such directions as may be issued in this behalf by the Central Government or by an officer or an agency duly authorised for this purpose by the Central Government.
(2) If the Central Government desires to extract Helium from natural gas, the licensee/lessee, in order to enable the Government to install and operate equipment and facilities for carrying out helium recovery operations, shall make available to the Central Government or its nominee the area and utilities required for such operations and in such a case the licensee/lessee shall be entitled for compensation based on the internal company accou
(1) Upon written application being made by the licensee or the lessee, or, where there are two or more of them, by not less than one-half of their number, 1[the Central Government, where the licence or the lease has been granted by it, or the State Government with the prior approval of the Central Government where the licence or the lease has been granted by the State Government may, from time to time, if it considers that adequate reason have been furnished, authorise], for periods not on any occasion exceeding six months, suspension of any or all of the terms, covenants or conditions relating to the working of the 2[area] covered by the licence or the lease.
(2) 1[The Central Government or the State Government, as the case may be,] if it authorises; suspension as aforesaid, impose such conditions as it may think fit for the protection of any bore-holes, equipment or works on such
(1) If the licensee or the lessee or his executors, administrators or assigns at any time during the term of the licence or the lease—
(a) fails to fulfil, or contravenes, any of the terms, covenants and conditions contained therein, or
(b) fails to use the 1[area] covered by in bona fide for the purpose for which it has been granted, or
(c) uses such 1[area] for a purpose other than that for which it has been granted.
2[the Central Government, or, as the case may be, the State Government with the prior approval of the Central Government], 3[may, after considering the representation, if any, made by such person impose the penalty aforesaid], where it is satisfied that the failure, contravention or user is such as cannot be
(1) Upon determination or cancellation or relinquishment in part or in full of a licence, the licensee shall deliver the area released on account of the determination or cancellation or relinquishment after restoring it in good order and condition in accordance with international practices within six months from the date of such determination or cancellation or relinquishment, or within such further time as the Central Government or the State Government, as the case may be, may allow.
(2) In the event of lessee opting not to continue mining operations and opts to relinquish the leased area in part or in full, or a lease is to be determined, the lessee shall deliver up the area released by such relinquishment or determination of lease after restoring it in good order and condition in accordance with the abandonment plan approved by the Central Government. However, lessee shall have
(1) All licence fees, lease fees, royalties and other payments under these rules shall, if not paid to 1[the Central Government or the State Government, as the case may be] within the time specified for such payment, be increased by 2[a penal rate of 200 (two hundred) basis points over the prime lending rate of State Bank of India for the delayed period.]
(2) Subject to these rules, if any licence fee, lease fee, royalty or other payment due in respect of a licence or a lease is in arrears for more than three months, 3[the Central Government or, as the case may be, the State Government with the prior approval of the Central Government, may] cancel such licence or lease and such cancellation shall be published in the Official Gazette and shall take affect from the date of such publication.
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(1) Every licensee or lessee shall—
(a) so far as is reasonably practicable collect, label and preserve for reference for a period of at least twelve months all bore-cores and characteristic samples of the strata encountered in any bore-hole on the 1[area] covered by the licence or the lease and samples of any petroleum or water discovered in any bore-hole on such 1[area], and
(b) furnish to the Central Government detailed reports of all examinations made of such cores and samples.
(2) Cores and samples preserved as aforesaid shall at all times be made available for examination to the agent authorised by the Central Government and may be taken for the purpose of analysis or other examination but no information obtained as a result of such analysis or examination shall be publ
The lessee shall comply with such directions as the Central Government, 1[where the lease has been granted by that Government or where the lease has been granted by the State Government, as the Central Government, or the State Government, with the prior consent of the Central Government] may issue restricting the use of petroleum or 2[oil or gas or coal bed methane or gas hydrate] for any purpose which the Central Government or the State Government may consider to be uneconomical or conductive to waste.
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1. Subs. by G.S.R. 371, dated 9th March, 1966.
2. Subs. by G.S.R. 295(E), dated 1st April, 2003.
The Central Government may issue instructions for—
(a) the spacing of oil wells; and
(b) the spacing of gas wells:
Provided that no such well shall be drilled at any point, within a minimum distance, to be prescribed by the Central Government, of any railway, pipeline or other right of way, surveyed road, dwellings, industrial plant, air-craft runway, buildings used for military or public purposes, or within 1[three kilometres] of any mine, whether active or abandoned, unless the special permission of the Central Government is obtained in advance.
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1. Subs. by G.S.R. 842, dated 30th May, 1964.
The Central Government may in the interests of conservation of mineral oils by general or special order, restrict the amount of petroleum or 1[or oil or gas or coal bed methane or gas from gas hydrate] that may be produced by a lessee in a particular field.
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1. Subs. by G.S.R. 295(E), dated 1st April, 2003.
(1) The Central Government may by notification in the Official Gazette prescribe conditions to regulate the conduct of operations by a lessee 1[or licensee] in a field or area where it has reason to believe that the petroleum deposit extends beyond the boundary of the leased 1[or licenced] area into areas worked by other lessees 1[or licensee or into areas not covered by any licence or lease] and may require the lessee 1[or licensee] to undertake any operation or prohibit any operation or permit it to be undertaken subject to such conditions as it may deem fit.
(2) Any order under rule 27 or notification issued by the Central Government under sub-rule (1) of this rule shall be deemed to be a condition of the lease.
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1. Ins. by G.S.R. 295(
The Central Government may after reasonable notice to the lessee,—
(a) assume control of the operation of an oil well or gas well and adopt such means as may appear to it necessary or expedient to prevent the escape of petroleum or water from the well, if the lessee fails to do so appears unable to do so;
(b) assume control of the operation of an oil well or gas well and adopt such means as may appear to it necessary or expedient to prevent the access of water to such well or to the petroleum bearing or 1[oil bearing or to both or gas bearing or coal bed methane bearing or gas hydrate being strata;]
(c) for the above purpose appoint such agents as may be deemed necessary and authorise them to enter upon the premises and perform the work and for this purpose to take p
No licensee or lessee shall—
(i) suspend normal drilling;
(ii) suspend normal producing operations;
(iii) abandon an oil well or gas well;
(iv) re-condition such a well;
(v) resume drilling operations after a previous completion, suspension or abandonment of such a well; or
(vi) resume producing operations after a previous suspension by giving to the Central Government at least a fortnight’s notice of any or all of the aforesaid actions, provided that, if normal drilling or normal producing operations have to be suspended immediately due to any unforeseen reason, notice thereof shall be given to the Central G
(1) If the Central Government is satisfied after holding an enquiry that an oil well or gas well is being operated in such a way that any provision of these rules or any order of the Central Government pursuant to these rules has been or is being contravened, the Central Government may order that, on and after a date to be fixed by the order, no production is to be permitted from the well and that it is to be shut down and kept shut down until such time as the Central Government may specify.
(2) If, the opinion of the Central Government, waste, damage to property, or pollution can thereby be prevented, the Central Government may order the well to be shut down pending an enquiry under sub-rule (1), which enquiry shall be held within fifteen days of the making of such order.
(1) If the holder of a Petroleum Exploration Licence or Mining Lease or his transferee or assignee fails, without sufficient cause, to furnish the information or returns or acts in any manner in contravention of sub-rule (2) of rule 14, rule 19 2[rule 21] and rule 24, or to allow any authorised person as provided in rule 32 to enter into and inspect any oil well or gas well or any drilled hole or information well in the process of drilling, he shall be punishable with imprisonment for a term which may extend to six months or with fine which may extend to one thousand rupees or with both.
(2) Whoever, after having been convicted of any offence referred to in sub-rule (1), continues to commit such offence shall be punishable for each day after the date of the first conviction during which he continues so to offend, with fine which may extend to one hundred rupees.]
&nb
.—(1) For the purpose of ascertaining whether the provisions contained in rules 24 to 28 and 30 and any orders, instructions and directions issued thereunder have been or are being, complied with by the licensee or the lessee and whether the prospecting or mining operations are being carried on by him in accordance with these rules, the Central Government may, by notification in the Official Gazette, constitute a suitable agency consisting of such number of persons as the Central Government thinks fit.
(2) It shall be the duty of such agency for the purposes aforesaid to supervise from time to time any oil well or gas well or any drilled hole or information well in the process of drilling and submit its report to the Central Government accordingly.
(3) The agency may, in order to carry out its functions under these rules, depute any pers
Every licence or lease shall be subject to the following term, namely:—
Any dispute [including 1[***] a dispute regarding the market price referred to in rule 18] between the Government and the licensee or the lessee regarding—
(a) any right claimed by the licensee or the lessee under the licence or the lease, or
(b) any breach alleged to have been committed by the licensee or the lessee of any of the terms, covenants or conditions of the licence or the lease, or any penalty proposed to be inflicted therefor, or
(c) the fees, royalty or rents payable under the licence or the lease, or
(d) any other matter or thing connected with the licence or the lease,
Notwithstanding the supersession of Petroleum Concession Rules, 1949, all licences and leases granted thereunder, which are still in force on the commencement of these rules, shall 1[subject to the provisions contained in sub-rule 1 (a) of rule 141] continue to be in force and such supersession shall not affect—
(i) any right, privilege, obligation or liability acquired, accrued or incurred under the said Petroleum Concession Rules, 1949, or
(ii) any penalty, forfeiture or punishment incurred in respect of any contravention of the provisions of the said Petroleum Concession Rules, 1949, or the said licences and leases:
2[Provided that any such licence or lease may be modified by mutual agreement between the Central Government and the licensee or the lessee where such licence
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