Why long-term investment confidence will define India's upstream growth story

India has made significant progress in reforming its upstream oil and gas sector. From introducing the Hydrocarbon Exploration and Licensing Policy (HELP) and the Open Acreage Licensing Programme (OALP) to improving data access and streamlining approvals, successive policy measures have enhanced the ease of doing business and opened new opportunities for investment.

However, as the sector competes for increasingly scarce global capital, the next challenge is no longer attracting investors into the market; it is giving them the confidence to remain invested over the decades-long lifecycle of upstream assets

This challenge is particularly important because upstream oil and gas investment is fundamentally different from most industries. Exploration projects require billions of dollars in capital, advanced technologies and years of sustained investment before commercial returns are realised.

Investors therefore evaluate not only geological potential but also the predictability of the regulatory environment, contract sanctity and confidence that policy decisions will remain consistent throughout an asset's lifecycle. In today's global energy landscape, regulatory certainty has become as important as resource potential itself.

The experiences of private operators over the past decade demonstrate why this matters. Long-running disputes over licence renewals, contractual interpretation and project implementation have created uncertainty around commercially viable assets. The Cambay block, where a long-pending licence renewal culminated in the transfer of operations while the matter remains under judicial review, has raised broader questions around tenure visibility for mature producing fields.

Similarly, the KG-D6 arbitration has remained unresolved for more than a decade, while the prolonged revival of the PY-3 field and delays affecting discoveries such as Ashok Nagar illustrate how regulatory and administrative uncertainty can defer production despite proven resource potential. Although each case has distinct legal and technical circumstances, collectively they reinforce a broader concern for investors about whether long-term commitments can be supported by predictable regulatory outcomes.

The implications extend beyond individual projects. Upstream investment is globally competitive, and capital is increasingly flowing to countries such as Guyana, Brazil, Namibia and Suriname, where governments have combined attractive geology with stable fiscal regimes, policy continuity and faster regulatory decision-making. Investors today price above-ground risks including policy predictability, dispute resolution timelines and regulatory consistency with the same rigour as subsurface potential. Unless India offers comparable investment certainty, it risks losing a greater share of globally mobile capital despite possessing one of the world's largest underexplored hydrocarbon basins.

This is not an argument for lighter regulation. Governments must continue to safeguard sovereign resources and enforce compliance. But effective regulations are strengthened when decisions are transparent, timely and consistently applied. The Petroleum and Natural Gas Rules, 2025 represent an important step towards reinforcing confidence by providing greater clarity on lease extensions for producing fields. Their success, however, will depend on implementation that provides investors with visibility across the entire lifecycle of an asset.

India's geological potential has never been in doubt. The real question is whether the country can convert that potential into sustained investment. Going beyond ease of doing business to building long-term investment confidence will determine whether India secures the capital, technology and expertise needed to strengthen domestic production and reduce import dependence. In the global competition for upstream investment, regulatory predictability is no longer a procedural issue; it is a strategic economic advantage.

The author is the managing partner for Cosmos Legal.

The opinions expressed in this article are those of the author and do not purport to reflect the opinions or views of THE WEEK.