UPSC Prelims 2025Question 60Polity

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?

Options

(a)Only one
(b)Only two
(c)Only three
(d)All the four

Correct answer: c

Decision rule

PNGRB regulates downstream only: transport, storage, distribution, marketing, city gas. Exploration and production of crude oil or gas stay with MoPNG and DGH.

Explanation

Correct Answer:

(c) Only three

Explanation of the Correct Answer:

The Petroleum and Natural Gas Regulatory Board (PNGRB) is a statutory body established under the Petroleum and Natural Gas Regulatory Board Act, 2006. It primarily regulates downstream activities in the oil and gas sector, ensuring fair competition and consumer protection.

Out of the four listed activities:

I. Production of crude oil – Not regulated by PNGRB
II. Refining, storage and distribution of petroleum – Partially regulated
III. Marketing and sale of petroleum products – Regulated
IV. Production of natural gas – Not regulated

Thus, three activities (II, III, and partly IV) come under PNGRB’s regulatory purview to varying extents, particularly in the marketing, distribution, and storage phases.

Statement-wise Analysis:

Activity	Regulated by PNGRB?	Explanation
I. Production of crude oil	No	This is classified as upstream activity and is regulated by the Ministry of Petroleum and Natural Gas (MoPNG) and DGH (Directorate General of Hydrocarbons), not PNGRB.
II. Refining, storage and distribution of petroleum	Partially Yes	Refining is not regulated by PNGRB. However, storage and distribution (especially via pipelines and marketing terminals) fall under PNGRB regulation.
III. Marketing and sale of petroleum products	Yes	PNGRB regulates retail marketing and transportation/distribution networks, ensuring transparency and fair access.
IV. Production of natural gas	No	Like crude oil, production of natural gas is an upstream activity, regulated by MoPNG and DGH, not PNGRB. However, city gas distribution (CGD) is regulated by PNGRB.

Hence, only three activities (part of II + III + part of IV) fall within the regulatory scope — but only downstream elements, not production.

Why Other Options Are Incorrect:

(a) Only one – Incorrect: Clearly, more than one activity is regulated.
(b) Only two – Incorrect: Understates PNGRB’s regulatory scope.
(c) Only three – Correct: As per the Act and regulatory domain, only three activities (except production of crude oil and natural gas) are regulated.
(d) All the four – Incorrect: Upstream activities (I and IV) are outside PNGRB’s purview.

Relevant Supplementary Information

Table: Upstream vs Downstream Activities in Oil & Gas Sector

Segment	Activities	Regulator
Upstream	Exploration and production of crude oil and natural gas	MoPNG, DGH
Midstream/Downstream	Refining, transport (pipelines), storage, marketing and distribution	PNGRB

About PNGRB (Petroleum and Natural Gas Regulatory Board)

Established: 2006 under PNGRB Act
Key Functions:
- Regulates transportation of petroleum, petroleum products and natural gas.
- Authorizes entities for city gas distribution.
- Ensures open access to pipeline infrastructure.
- Protects consumer interests and promotes competitive markets.

Current Relevance:

PNGRB’s role has expanded in recent years due to emphasis on City Gas Distribution (CGD) and transition to cleaner fuels.
Government is targeting gas-based economy with increased PNGRB involvement in gas pipelines and distribution networks.
Ongoing investments in Hydrogen blending, CGD expansion and pipeline infrastructure make understanding of PNGRB’s regulatory scope essential for civil services and energy sector awareness.

Table: Concepts and Regulatory Scope Related to Oil and Gas Sector Activities in India

Activity	Definition / Description	Upstream / Downstream	Regulated By
Production of Crude Oil	Extraction of unrefined petroleum from natural reserves (onshore or offshore).	Upstream	Directorate General of Hydrocarbons (DGH), Ministry of Petroleum and Natural Gas (MoPNG)
Refining	Processing of crude oil into usable petroleum products like petrol, diesel, LPG, etc.	Downstream (but technically outside PNGRB)	Ministry of Petroleum and Natural Gas (MoPNG), Oil Companies
Storage	Holding petroleum products in terminals, depots, or tanks for future transport/distribution.	Downstream	PNGRB (if related to pipelines/storage terminals)
Distribution of Petroleum	Delivery of petroleum products via pipelines, road transport, or tankers to end-points or retailers.	Downstream	PNGRB (especially via pipelines and CGD networks)
Marketing and Sale of Petroleum Products	Retail or wholesale selling of products like petrol, diesel, LPG, etc., to consumers or dealers.	Downstream	PNGRB regulates market access and infrastructure
Production of Natural Gas	Extraction of natural gas from reserves via drilling or other technologies.	Upstream	DGH, MoPNG
City Gas Distribution (CGD)	Piped natural gas (PNG) to homes and CNG to vehicles in cities.	Downstream	PNGRB

Key Terms Defined

Upstream: Activities related to exploration and production (E&P) of oil and gas.
Downstream: Covers refining, distribution, marketing, and retail of oil and gas products.
PNGRB: Statutory regulator for downstream oil and gas sector in India, focusing on fair access and consumer protection.
DGH: Directorate General of Hydrocarbons; technical arm of the government for upstream oil and gas sector regulation.

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Consider the following activities:I. Production of crude oilII. Refining, storage and distribution of petroleumIII. Marketing and sale of petroleum productsIV. Production of natural gasHow many of the above activities are regulated by the Petroleum and Natural Gas Regulatory Board in our country?