New Delhi: The Rajya Sabha on Tuesday passed the Oilfields (Regulation and Development) Amendment Bill, 2024, via a voice vote, paving the way for significant changes in India’s oil and gas exploration laws. The bill aims to delink petroleum operations from mining, update definitions to include modern hydrocarbon resources, and streamline processes to encourage investment and operational efficiency in the energy sector.
Union Petroleum and Natural Gas Minister Hardeep Singh Puri hailed the passage of the bill as a transformative step for the industry. “India’s rapidly growing energy sector takes a historic step into the future with the landmark amendments to the Oilfields (Regulation and Development) Act, 1948, being successfully passed in Rajya Sabha today,” Puri wrote on X.
Key reforms to oil and gas laws
The amendments address ambiguities in the existing law by separating petroleum operations from mining activities. “Since petroleum is extracted by drilling, delinking terms like ‘mine,’ ‘quarried,’ or ‘excavated’ will introduce ease of doing business into the sector, which is more technologically driven,” Puri said.
The definition of “mineral oil” has been updated to reflect advancements in the energy sector. It will now encompass unconventional hydrocarbon resources, ensuring the law keeps pace with emerging technologies and exploration methods.
The leasing framework has also been updated. While leases granted before the amendment will retain the term “mining lease,” new agreements will use the term “petroleum lease,” aligning Indian practices with international standards.
Focus on sustainability and green energy
The bill incorporates measures to support India’s climate goals and energy transition. It empowers the government to create rules for protecting the environment, promoting green energy projects, and adopting energy transition measures. These changes are expected to enable both the government and private companies to align operations with national and global sustainability targets.
Puri highlighted the role of enhanced recovery methods in increasing efficiency and encouraging investment. The amendments aim to facilitate proper reservoir management and long-term planning, making the sector more attractive to investors.
Relief for small operators and investors
The bill addresses challenges faced by smaller operators and new entrants by allowing shared usage of production and processing infrastructure. This change is expected to reduce operational costs and make it easier for smaller players to enter the market.
To further attract investment, the amendments propose alternate dispute resolution mechanisms, providing quicker and more effective ways to handle disagreements. “The provision seeks to strengthen the mechanism for enforcing compliance by focusing on enhanced penalties and doing away with imprisonment, thus decriminalizing the sector,” Puri said.
Strengthening compliance and investor confidence
The bill also introduces provisions to strengthen compliance by enhancing penalties for violations. It proposes a clear mechanism for levying penalties and addressing appeals through an adjudication authority. This is expected to provide greater clarity and predictability for operators, further boosting investor confidence.
The government views the bill as a step toward modernizing the oil and gas sector and aligning it with global practices. By removing ambiguities, introducing investor-friendly provisions, and addressing environmental concerns, the government aims to attract domestic and international investments, drive efficiency, and support the country’s broader energy transition goals.
The amendments are also expected to contribute to India’s ambition of achieving net-zero emissions by 2070 and strengthening its position as a major player in the global energy market. The focus on creating a business-friendly and sustainable framework reflects the government’s commitment to fostering growth in the energy sector while addressing climate challenges.
