The Lok Sabha has approved the Oilfield (Regulatory and Development) Amendment Bill, 2024, a significant step towards improving the legal framework for oil and gas exploration and production in India. The Bill aims to attract more investments by simplifying regulations and making the sector more business-friendly.
Background and Reforms in the Oil and Gas Sector
The Bill was earlier cleared by the Rajya Sabha on December 3, 2024. Over the past decade, the government has implemented key reforms to boost oil and gas production. These include:
- Shifting from a production-sharing model to a revenue-sharing model for awarding contracts.
- Simplifying approval processes and reducing bureaucratic hurdles.
- Allowing exploration in areas previously marked as “No-Go” zones.
- Deregulating crude oil and providing marketing and pricing freedom for natural gas.
As a result of these measures, 76% of the active oil and gas exploration areas in India have been awarded after 2014, according to an official statement.
Key Features of the Amendment Bill
While introducing the Bill, Petroleum and Natural Gas Minister Hardeep Singh Puri highlighted the need for a modernized framework that supports investments and encourages industry collaboration. He emphasized that the Bill was drafted after extensive discussions with industry leaders, investors, and stakeholders to address key concerns.
The amendments aim to:
- Simplify the Licensing Process: Replace multiple permits with a single petroleum lease, making operations more efficient.
- Encourage Energy Innovation: Support new technologies such as Carbon Capture Utilization and Sequestration (CCUS) and green hydrogen production.
- Improve Small Operators’ Viability: Allow resource and infrastructure sharing among different companies to lower costs and improve profitability.
- Ensure Stability for Global Investors: Provide long-term security in lease agreements and a reliable dispute resolution system.
- Strengthen Enforcement: Increase penalties for violations to up to ₹25 lakh and ₹10 lakh per day for ongoing infractions.
Impact on States and Business Climate
Minister Puri assured that the Bill does not impact the rights of states. State governments will continue to grant petroleum leases, issue necessary clearances, and receive royalty payments as before.
He added that with these reforms, India will become a more attractive destination for oil and gas production, while ensuring that the country’s hydrocarbon potential is fully utilized. The changes will also enhance the ease of doing business, making investment in the sector more predictable and stable.
Conclusion
The Oilfield Amendment Bill, 2024, marks a major shift in India’s energy sector. By making the regulatory environment more investor-friendly, the government aims to drive higher exploration, better technology adoption, and increased foreign investment. With its passage, India moves closer to unlocking its vast hydrocarbon reserves and securing its energy future.
-
-
-
-
-
-
