The Indian Government will retain pre-emption rights over all oil and natural gas produced within the country in the event of a national emergency, according to the draft rules under the recently amended oilfields legislation, reported the Economic Times.

This measure is designed to safeguard national interests and maintain public welfare during crises.

The Ministry of Petroleum and Natural Gas has opened a dialogue for feedback on the draft rules following the passage of the Oilfields (Regulation and Development) Amendment Bill by parliament earlier this year.

The bill updates provisions from the 1948 Act to stimulate domestic production, attract investment and assist India's energy transition objectives.

According to the draft: “In the case of a national emergency in respect of petroleum products or mineral oil, Government of India shall, at all times, during such emergency, have the right of pre-emption of the mineral oils, refined petroleum or petroleum or mineral oil products produced from the crude oil or natural gas extracted from the leased area, or of the crude oil or natural gas where the lessee is permitted to sell, export or dispose of without it being refined within India.”

Producers will be compensated at a “fair market price prevailing at the time of pre-emption”, ensuring they are not financially disadvantaged by the government's exercise of this right, the report said.

However, the draft does not specify the conditions that would trigger a national emergency.

Industry insiders suggest that scenarios such as military conflicts or natural disasters could activate this provision.

"Government of India shall be the sole judge as to what constitutes a national emergency in respect of mineral oils, and its decision in this respect shall be final," the draft rules stated.

Additionally, the draft rules stipulate that oil and gas operators may be exempt from their contractual obligations under force majeure circumstances, which encompass a wide range of unforeseeable events.

In a related development, India has announced significant modifications to its domestic gas allocation policy, aiming to improve the supply and affordability of natural gas.

From the first quarter of 2026, allocations for compressed natural gas and piped natural gas will be planned on a two-quarter advance basis. The updated policy also includes new well gas from the nomination fields of government-owned ONGC and Oil India.