Rajya Sabha Passes Bill Easing Investment In Oil-Gas E&P Operations

The Rajya Sabha on Tuesday passed the Oilfields (Regulation and Development) Amendment Bill, 2024, introducing significant changes aimed at simplifying business operations in the oil and gas exploration and production (E&P) sector and attracting more investments.

The bill, which was passed through a voice vote, seeks to delink petroleum operations from mining activities, a move expected to encourage greater investments in the sector.

During the debate, Petroleum and Natural Gas Minister Hardeep Singh Puri emphasized the need for a robust oil and gas sector, stating, “We need oil and gas sector (for) 20 more years. We need to bring this legislation here to provide a win-win confidence not only to our own operators but also to foreign investors so that they can come and do business here with view to benefit everyone.”

Describing the amendments as “landmark,” Puri expressed that they would strengthen India’s energy sector in a post on the social media platform X.

India’s rapidly growing energy sector takes a historic step into the future with the landmark amendments to Oilfields (Regulation and Development) Act 1948 being successfully passed in Rajya Sabha today.

The epochal amendments proposed will further strengthen and propel India’s… pic.twitter.com/PaB5627Pg3

— Hardeep Singh Puri (@HardeepSPuri) December 3, 2024

The government stated that the changes were essential due to the evolving global energy landscape, and the amendments aim to modernize the 1948 Act to reflect current energy priorities, ease business operations, decriminalize provisions, and align India’s E&P framework with global standards.

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“The term ‘mineral oil’ is traditionally understood to be natural gas and petroleum. As unconventional hydrocarbon resources have been discovered and developed, the definition needs to be updated to reflect the modern understanding of the term,” Puri noted in a post.

The bill expands the definition of petroleum to include coal bed methane, oil shale, shale gas, shale oil, tight gas, tight oil, and gas hydrate while excluding coal, lignite, and helium from the petroleum process. The bill also replaces the term "mining lease" with “petroleum lease,” granting companies the rights to explore, prospect, and produce mineral oils, though existing mining leases will remain valid.

To support smaller operators and new entrants, the bill introduces provisions allowing the sharing of production and processing facilities and other infrastructure between multiple lessees, addressing challenges related to high operational costs. The bill also assures investors that the terms of their leases will remain stable throughout the lease period and will not be altered to their disadvantage. Furthermore, alternative dispute resolution mechanisms are proposed to enhance efficiency in addressing disputes.

The government emphasized the urgent need to increase domestic oil and gas production to meet rising demand and reduce import dependence, noting that India imports 85 per cent of its crude oil. The bill aims to unlock valuable hydrocarbon resources by fostering an investor-friendly environment, ensuring stability, and addressing energy transition issues, including the development of cleaner fuels for the future.

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