Context:
Recently, the Oilfields (Regulation and Development) Amendment Bill, 2024, was passed by the Rajya Sabha through a voice vote.
More on the News
- The Bill amends the Oilfields (Regulation and Development) Act of 1948 to enhance the ease of doing business in the exploration and production (E&P) sector.
- Originally, oilfields, mines, and minerals were comprehensively regulated through the Mines and Minerals (Regulation and Development) Act, of 1948.
- Then in 1957, the Mines and Minerals (Development and Regulation) Act was enacted for the development and regulation of mines and minerals.
- The original Act of 1948 was renamed as the Oilfields (Regulation and Development) Act, 1948 and was made applicable to mineral oils only.
Objectives of the Bill
- The Bill aims to streamline the oil and gas exploration business in India and delink petroleum operations from mining operations.
- It calls for reporting of carbon and greenhouse gas emissions from mineral oil operations and facilitating comprehensive energy projects at oilfields, including renewables such as solar, wind, and others.
- Towards decarbonising efforts, it has also expanded newer technologies such as green hydrogen and carbon capture utilisation and storage (CCUS).
Key Amendments of the Bill
Expansion of Mineral Oils Definition:
- The Bill expands the definition of mineral oils to include:
- Naturally occurring hydrocarbons.
- Coal bed methane.
- Shale gas/oil.
- Exclusions: Mineral oils will not include coal, lignite, and helium.
Introduction of Petroleum Lease:
- The Act of 1948 provides for a mining lease. The Bill replaces the existing mining lease with a petroleum lease, which covers activities like exploration, prospecting, production, and disposal of mineral oils.
- However, existing mining leases under the Act will remain valid.
Rule-Making Powers of the Central Government:
- The Bill retains central government powers to make rules on:
- Granting of leases, including terms, conditions, and areas.
- Conservation, development, and production methods for mineral oils.
- Collection of royalties, fees, and taxes.
- New provisions in the Bill include rules on:
- Merger and combination of petroleum leases.
- Sharing of production and processing facilities.
- Lessees’ obligations to protect the environment and reduce emissions.
- Alternative dispute resolution mechanisms regarding petroleum leases.
Decriminalization of Offences:
- The Bill proposes to remove the earlier imprisonment provision for the rule violation to make it more business-friendly. However, it increases the monetary fine for them from Rs. 1000 to Rs 25 lakhs.
- The also adds new offences:
- Undertaking activities like exploration, prospecting, or production without a valid lease.
- Non-payment of royalty.
- These new offences are also punishable with a penalty of Rs 25 lakh. However, continued violations in all offences will attract an additional penalty of up to Rs 10 lakh per day.
Adjudication of Penalties:
- The central government will appoint an officer of the rank of Joint Secretary or higher to adjudicate penalties.
- Appeals can be made to the Appellate Tribunal under the Petroleum and Natural Gas Regulatory Board Act, 2006.