LS passes Oilfields Amendment Bill
New Delhi: In a landmark move to modernise India’s energy sector, the Lok Sabha on Wednesday passed the Oilfields (Regulation and Development) Amendment Bill, 2024.
The legislation, which had previously cleared the Rajya Sabha on December 3, 2024, seeks to overhaul the existing legal framework governing oil and gas exploration, making the sector more attractive to investors while ensuring long-term energy security. By aligning with international best practices, the amendments aim to create a stable and predictable regulatory environment, crucial for expanding exploration and production activities in the country. Over the last decade, the Government has implemented a series of strategic reforms to promote the domestic hydrocarbon sector.
A shift from the ‘production sharing’ to the ‘revenue sharing’ model in awarding contracts, the deregulation of crude oil marketing, and the release of previously restricted exploration areas have significantly accelerated India’s oil and gas exploration. As a result, more than 76 per cent of active exploration acreage in India today has been awarded post-2014, reflecting a dynamic shift in policy that fosters both domestic and foreign investment.
A key provision in the amendment is the replacement of the term ‘mining lease’ with ‘petroleum lease.’ This change broadens the scope of activities covered under the lease, encompassing exploration, prospecting, production, processing, and disposal of mineral oils. Additionally, the definition of ‘mineral oils’ has been expanded to include various forms of hydrocarbons such as crude oil, natural gas, petroleum, condensate, coal bed methane, oil shale, shale gas, shale oil, tight gas, tight oil, and gas hydrate. This revision brings India’s regulatory framework in line with the evolving global energy landscape while ensuring continuity, as existing mining leases will remain valid.
Another significant aspect of the amendment is the decriminalisation of certain provisions. Previously, regulatory violations carried penalties of up to six months of imprisonment or a fine of Rs 1,000. Under the new framework, these penalties have been replaced with a monetary fine of Rs 25 lakh, to be adjudicated by an officer of the rank of Joint Secretary or above. This shift not only promotes ease of doing business but also creates a more investment-friendly environment for stakeholders in the energy sector.
Union Minister for Petroleum and Natural Gas Hardeep Singh Puri hailed the passage of the Bill as a historic step in India’s energy transformation. He emphasised that the amendments would ensure greater policy stability, facilitate international arbitration, and encourage closer collaboration between the Government and industry players.
The introduction of a single permit system, replacing the current requirement for multiple licenses, is expected to streamline operations and significantly boost investor confidence. The new regulatory framework also facilitates resource and infrastructure sharing among operators, a move particularly beneficial for small oil field operators struggling with infrastructural constraints.
Puri underscored the importance of energy consumption as a key indicator of economic performance. India’s crude oil consumption has risen from 5.0 million barrels per day three and a half years ago to 5.5 million barrels per day at present.
With continued economic growth, this figure is projected to reach 6.5 to 7.0 million barrels per day, further necessitating enhanced domestic exploration and production efforts.
