Context
The Rajya Sabha recently approved the Oilfields (Regulation and Development) Amendment Bill, 2024, through a voice vote, clearing the path for major reforms in India’s oil and gas exploration laws.
Aims and objective
- 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.
Key Reforms to Oil and Gas Laws
- Defined Mineral Oils
- In the Oilfields (Regulation and Development) Act, 1948, petroleum and natural gas were the only two defined as mineral oils.
- This Bill expands the definition to include unconventional hydrocarbon resources such as coal bed methane, oil shale, shale gas, shale oil, tight gas, tight oil, and gas hydrate, but does not include coal, lignite and helium occurring in the petroleum process.
- The broader definition (of mineral oils) enables the efficient exploration, development, and production of both conventional and unconventional hydrocarbon resources without any policy confusion
- The leasing framework has been revised. Existing leases will retain the term “mining lease,” while new agreements will adopt the term “petroleum lease,” bringing Indian practices in line with international standards.
- Expands Centre’s regulatory powers, decriminalises offences
- Under the Act, the Centre was empowered to regulate the grant, terms and conditions, and time period of leases, production, storage and conservation of mineral oils and collecting royalties, fees and taxes for mineral oils.
- This Bill expands the Centre’s powers to include framing rules for lessees to reduce emissions, sharing of oil production and processing units, merger of leases and resolving disputes on leases.
- Additionally, the Bill decriminalizes offences related to the aforementioned petroleum activities, such as invalid leases and non-payment of royalties. However, it raises the monetary fine for these offences from Rs. 1,000 to Rs. 25 lakhs.
- Opening up no-go areas to oil exploration
- The Centre has allowed oil exploration within previously defined no-go areas, such as those near missile testing sites.