As a core sector, the oil and gas industry plays a significant role in shaping the Indian economy. Companies are given license to undertake exploration activities under different forms of granting instruments such as Concessions, Production Sharing Contracts [‘PSC’], and Revenue Sharing Contracts [‘RSC’]. The government initially adopted a relatively complex granting instrument (PSC) for engaging private players in exploration activities. Experience has shown that due to their complex structure, PSCs are prone to giving rise to a wide array of disputes. Twenty-two out of the 310 PSCs entered into by the government of India have been referred to arbitration and, should the trends hold, many more will be referred in the future. Although the government has switched from the PSC model to the RSC model, the nature of disputes remains essentially the same under both instruments. In this article, after discussing the nature of disputes that arise in the oil and gas industry, the regulatory framework in the sector, and aspects such as the volume of investment and the long-term engagement between the parties, the authors put forth a case for replacing arbitration with a non-confrontational mode of dispute resolution (i.e., mediation), so as to preserve the business relationship between the parties after disputes while avoiding the plethora of pitfalls surrounding arbitration.