Oilfields (Regulation and Development) Amendment 2026: Revised Royalty Rates for Crude Oil and Natural Gas
The Ministry of Petroleum and Natural Gas issued an official notification on 8th May 2026, amending the schedule to the Oilfields (Regulation and Development) Act, 1948.
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The Ministry of Petroleum and Natural Gas issued an official notification on 8th May 2026, amending the schedule to the Oilfields (Regulation and Development) Act, 1948. The Central Government used powers under sub-section (4) of Section 6A of the Act to substitute the existing schedule with a revised one, effective from the date of gazette publication. It revises royalty rates for crude oil, casing head condensate, and natural gas production in India.
The amended schedule covers different policy regimes, including HELP and DSF, introducing concessional and zero royalty rates for deepwater and ultra-deepwater offshore blocks to encourage domestic hydrocarbon exploration and boost energy security in India.
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Key Changes in Royalty Rates for Crude Oil and Natural Gas
The amendment revises crude and natural gas royalty rates across different production regimes and field types.
For Nomination Basis and Pre-NELP Areas
For areas awarded on a nomination basis to National Oil Companies, and for exploration blocks awarded before the New Exploration Licensing Policy, the rates are:
- Onshore: 12.5%
- Shallow Water: 10%
- Deepwater and Ultra-Deepwater: 5% for the first 7 years from commencement of commercial production, rising to 10% from the 8th year onwards
For Areas under DSF and HELP
- Onshore: 12.5%
- Shallow Water: 7.5%
- Deepwater: 0% for the first 7 years, then 5% from the 8th year
- Ultra-Deepwater: 0% for the first 7 years, then just 2% from the 8th year
These rates are designed to lower the financial burden on exploration companies during their most capital-intensive phase.
Revised Royalty Rates under HELP and DSF Policies
What is HELP?
HELP stands for Hydrocarbon Exploration and Licensing Policy. Companies competitively bid for exploration blocks across India under a licensing framework.
What is DSF?
DSF stands for Discovered Small Field Policy. It covers smaller hydrocarbon fields that are already discovered but have not yet been commercially developed.
Royalty Rates under HELP and DSF
Under both DSF and HELP, the royalty structure for crude oil and natural gas is as follows:
- Onshore: 12.5%
- Shallow Water: 7.5%
- Deepwater: 0% for the first 7 years, then 5% from the 8th year onwards
- Ultra-Deepwater: 0% for the first 7 years, then 2% from the 8th year onwards
Experts think that these rates will make HELP and DSF blocks significantly more attractive for private and joint venture companies investing in domestic hydrocarbon production.
Concessional Royalty Rates for Deepwater and Ultra-Deepwater Blocks
For HELP contracts where bids were invited on or after 11th April 2019 and where commercial production commences within the specified period, 4 years for onshore or shallow-water blocks, or 5 years for deepwater or ultra-deepwater blocks, special basin-wise concessional royalty rates apply.
Deepwater Offshore Blocks
Years 1–7: 0% royalty from the date of commencement of commercial production
From Year 8 onwards:
- Category-I Basin: 4.5%
- Category-II Basin: 4%
- Category-III Basin: 3.5%
Ultra-Deepwater Offshore Blocks
Years 1–7: 0% royalty from the date of commencement of commercial production
From Year 8 onwards:
- Category-I Basin: 1.8%
- Category-II Basin: 1.6%
- Category-III Basin: 1.4%
These ultra-deepwater royalty benefits are among the most competitive in the history of India's hydrocarbon licensing policy.
Royalty Structure for Onshore and Offshore Oilfields in India
Here is a simple comparison of crude oil royalty rates under the HELP concessional framework across all field types:
For natural gas onshore blocks under the same concessional framework, rates are 9% (Category I), 8% (Category II), and 7% (Category III). Shallow water natural gas is 6.75%, 6%, and 5.25%, respectively.
In all cases, royalty is paid on the "Well Head Price." This is calculated by deducting 20% of the sale price for nomination regimes or 15% for other regimes from post-well-head costs. Royalty is computed on an ex-royalty basis under all regimes.
Changes in Natural Gas Production Royalty Rates
Nomination Basis, Pre-NELP, and CBM Areas
For areas awarded on a nomination basis, exploration blocks before the New Exploration Licensing Policy, and CBM areas, natural gas royalty is a flat 10% across all field types, onshore, shallow water, deepwater, and ultra-deepwater.
Under the New Exploration Licensing Policy
- Onshore: 10%
- Deepwater and Ultra-Deepwater: 5% for the first 7 years, then 10% from the 8th year
Under DSF and HELP
Natural gas follows the same structure as crude oil:
- Onshore: 10%
- Shallow Water: 7.5%
- Deepwater: 0% for 7 years, then 5% from the 8th year
- Ultra-Deepwater: 0% for 7 years, then 2% from the 8th year
Moreover, according to the notice, any additional gas production from APM fields beyond the BAU scenario, calculated by a third-party expert and approved by the Directorate General of Hydrocarbons, is eligible for a 10% reduction in applicable royalty rates.
Basin-Wise Categorisation under the New Royalty Framework
The notification divides India's sedimentary basins into three categories for the application of concessional rates under the Oilfields Amendment 2026.
Category-I Basins
These are India's most prolific and productive basins:
- Krishna-Godavari Basin
- Mumbai Offshore Basin
- Assam Shelf Basin
- Rajasthan Basin
- Cauvery Basin
- Assam-Arakan Fold Belt
- Cambay Basin
Category-II Basins
- Saurashtra Basin
- Kutch Basin
- Vindhyan Basin
- Mahanadi Basin
- Andaman-Nicobar Basin
- Himalayan Foreland
- Chhattisgarh Basin
Category-III Basins
These are frontier and less-explored basins that attract the lowest royalty rates:
- Kerala-Konkan Basin
- Bengal-Purnea Basin
- Ganga-Punjab Basin
- Pranhita-Godavari Basin
- Satpura-South Rewa-Damodar Basin
- Narmada, Spiti-Zankar, Deccan Syneclise, Cuddapah, Karewa, Bhima-Kaladgi, and Bastar Basin
Companies exploring Category-III basins pay the lowest royalty rate, encouraging investment in high-risk frontier areas under India's hydrocarbon licensing policy.
Impact of Revised Oilfield Royalty Rates on the Indian Energy Sector
The newly introduced petroleum royalty regime will bring about widespread benefits to India’s energy industry. The provision for zero royalties in deepwater and ultra-deepwater areas for the first 7 years is bound to reduce operational costs, thereby encouraging greater private participation in the offshore exploration policy environment. The result will be increased domestic energy production and enhanced energy security through reduced dependence on foreign oil and gas supplies.
Benefits of the 2026 Royalty Amendments for Hydrocarbon Exploration
The Oilfields Amendment 2026 delivers clear and practical advantages for businesses operating in the energy sector:
- Zero royalty for 7 years in deepwater and ultra-deepwater blocks reduces financial pressure at the most capital-intensive stage.
- Basin-wise concessional rates ensure companies in riskier, less-explored regions receive greater royalty relief.
- Faster production is rewarded. HELP contractors commencing production within 4–5 years of block award qualify for concessional rates.
- Lower barriers to entry for both domestic and international companies, boosting long-term investment in revised royalty rates.
- Companies involved in oil and gas exploration may also need environmental clearance and environmental consultancy support to operate legally. Corpseed's business compliance services and factory setup services help businesses meet all regulatory requirements efficiently.
Conclusion
The Oilfields (Regulation and Development) Amendment 2026, notified on 8th May 2026 by the Ministry of Petroleum and Natural Gas, introduces a progressive and investor-friendly petroleum royalty structure for India. With zero royalty for the first 7 years across deepwater and ultra-deepwater blocks, concessional HELP rates across three basin categories, and clearly revised royalty rates for both crude oil and natural gas, the government has sent a strong signal to the energy industry.
This amendment supports domestic hydrocarbon production, strengthens India's energy security, and aligns the country's oilfield compliance services framework with global standards.
About the Author
Mahek Sancheti
Content WriterMahek Sancheti, BAJMC graduate with a deep passion for writing. As a content writer, video content creator, creative content creator, and scriptwriter, I bring stories to life through words and visuals. I honed my skills by working with a prominent news agency, where I excelled in crafting compelling narratives and engaging content. Coming from a journalism and mass communication background I have skills to craft engaging narratives that captivate audiences. With a keen interest in writing and creativity, I aim to deliver impactful and meaningful content that resonates with diverse audiences.
https://www.linkedin.com/in/mahek-sancheti-837196212
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