UPSC Prelims 2025 Q60: PNGRB Regulated Activities — Explained

Consider the following activities:

I. Production of crude oil

II. Refining, storage and distribution of petroleum

III. Marketing and sale of petroleum products

IV. Production of natural gas

How many of the above activities are regulated by the Petroleum and Natural Gas Regulatory Board in our country?

Only one
Only two
Only three
All the four

Answer: (b) Only two

Statement-wise explanation

I: incorrect — Section 1(4) of the PNGRB Act, 2006 says the Act applies to petroleum and natural gas activities 'excluding production of crude oil and natural gas'. Producing crude oil is upstream work. The Ministry of Petroleum and Natural Gas and the Directorate General of Hydrocarbons (set up in 1993) oversee it under the Oilfields (Regulation and Development) Act, 1948.
II: correct — The Act's long title lists 'refining, processing, storage, transportation, distribution' of petroleum, petroleum products and natural gas as activities the Board regulates. Under Section 11, the Board authorises common carrier and contract carrier pipelines, regulates their access and transport tariffs, and authorises city gas distribution networks.
III: correct — The same long title includes 'marketing and sale'. Under Section 11, the Board registers entities to market notified petroleum products. It must also make sure that retail outlets display the maximum retail prices that the marketing companies have fixed.
IV: incorrect — The Act excludes 'production of crude oil and natural gas' in both its long title and Section 1(4). Gas production falls under the upstream regime: the Oilfields Act, 1948, the Petroleum and Natural Gas Rules, 1959, and exploration licensing run by MoPNG and DGH. PNGRB's role with gas starts after production, at pipelines, LNG terminals and city gas networks.

How to eliminate

This question has no absolute words to work with, so you need one fact: PNGRB is the downstream regulator, and its Act excludes the production of crude oil and natural gas. Once you know this, the four statements split into two pairs. Statements I and IV are both production, so they share one fate. Statements II and III are both after production, so they share another. That means the answer can only be two or four. A statutory regulator for the whole chain would make DGH's separate upstream role pointless. That leaves two. To remember: PNGRB covers everything 'after the well-head'.

Know more

India splits regulation of oil and gas at the well-head.

The PNGRB Act, 2006 set up the Petroleum and Natural Gas Regulatory Board, which took effect on 1 October 2007. Its long title states the purpose: 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. It has three aims: to protect consumers, to ensure uninterrupted supply across the country, and to promote competitive markets.

Segment	Activities	Who regulates
Upstream	Exploration, drilling, production of crude oil and gas	MoPNG and the Directorate General of Hydrocarbons (1993), under the Oilfields (Regulation and Development) Act, 1948 and the P&NG Rules, 1959
Midstream	Pipelines, LNG terminals, storage	PNGRB
Downstream	Refining, city gas distribution, marketing and sale	PNGRB

Main powers of PNGRB (Section 11):

Register entities that market notified petroleum products or set up LNG terminals.
Authorise entities to build common carrier and contract carrier pipelines and city or local gas distribution (CGD) networks.
Regulate pipeline access and fix transportation tariffs.
Make sure retail outlets display maximum retail prices.
Set technical and safety standards, and settle disputes between entities.

Common traps:

PNGRB does not set the retail prices of petrol or diesel. Petrol prices were decontrolled in 2010 and diesel prices in 2014. Oil marketing companies now set these prices.
The Oilfields Act was amended by Parliament in 2025. The amendment covers petroleum leases and upstream investment, and it does not move any power to PNGRB.
Licences for storing petroleum under the Petroleum Act, 1934 come from PESO, the explosives safety body. PNGRB's role in storage is economic and technical regulation.

In the news

Upstream regulation was in the news in the run-up to Prelims 2025. Parliament cleared the Oilfields (Regulation and Development) Amendment Bill, which the Rajya Sabha passed in December 2024. Expansion of city gas distribution under PNGRB authorisations was also being reported. This made the line between the upstream regulator and the downstream regulator a likely topic.

NCERT Concepts to Revise

City gas distribution: City gas distribution is a distribution-and-sale activity. Use it to decide which side of the production line it falls on.
National Gas Grid: The trunk pipelines of the gas grid are transportation infrastructure. Placing them in the value chain helps you sort the activities in this question.
Natural gas: Natural gas appears in both production and distribution, so knowing where it comes from helps you separate statement IV from the downstream activities.