The Government of India in an effort to increase exploration activities and increase private sector participation in the oil and gas exploration sector implemented the NELP in 1999, for the hydrocarbon sector, and Coal Bed Methane (CBM) in 2001 for the gas sector. The NELP regime introduced several benefits to the players such as seven year Income Tax holidays for the production of mineral oil, no custom duty on imports required for petroleum operations, removal of signature bonus, biddable cost recovery upto 100 percent.

The Petroleum and Natural Gas Regulatory Board Act was introduced in 2006 to facilitate and protect the interests of consumers and entities engaged in specified activities relating to petroleum, petroleum products and natural gas and to promote competitive markets.