New Delhi [India]: The Oilfield (Regulatory and Development) Amendment Bill, 2024, passed by Parliament last week, is set to revolutionize India’s oil and gas exploration and production sector. The bill aims to modernize the legal framework to align with current market demands, attracting greater investment while enhancing operational efficiency.
Key Highlights of the Bill
The bill is designed to support India’s vision of Viksit Bharat 2047 by reducing dependency on oil and gas imports and ensuring energy security, affordability, and accessibility.
- Simplified Processes:
- The bill streamlines approvals, reduces documentation, and ensures stable lease conditions, boosting investor confidence.
- Enhanced Investor Confidence:
- The introduction of flexible arbitration for faster dispute resolution will encourage foreign and domestic investments.
- Infrastructure Sharing & Lease Aggregation:
- This measure aims to empower independent private operators and maximize resource utilization.
- Support for Small Operators:
- The bill provides tailored measures to ensure equitable access for small businesses, fostering inclusive growth.
- Environmental Focus:
- The bill introduces global standards for GHG emission monitoring and outlines steps for an effective energy transition and sustainable development.
Major Industry Reforms
In recent years, the government has simplified regulations to encourage oil and gas exploration. Key changes include:
- Shifting from a production-sharing regime to a revenue-sharing regime for awarding contracts.
- Opening up previously restricted ‘No Go areas’ for new exploration.
- Deregulating crude exploration and granting marketing and pricing freedom for natural gas.
These reforms have led to significant progress, with over 76% of active exploration acreage awarded since 2014.
Key Provisions of the Bill
- Single Permit System: Replacing multiple licenses with a unified petroleum lease to streamline approvals.
- Technology Integration: Encourages the adoption of advanced technologies like Carbon Capture Utilization and Sequestration (CCUS) and green hydrogen production.
- Infrastructure Sharing: To improve viability for smaller operators and ensure better utilization of isolated oil blocks.
- Stable Tenure & Conditions: Ensures greater operational stability for global oil companies investing in India.
- Penalties for Non-Compliance: Penalties have been increased to ₹25 lakh and ₹10 lakh per day for ongoing infractions.
Cooperative Federalism
The bill retains the states’ rights to grant petroleum leases, issue statutory clearances, and receive royalties.
By improving the Ease of Doing Business, the bill is expected to unlock India’s hydrocarbon potential, making the country a lucrative hub for oil and gas investments.