New Delhi [India], March 20 (ANI): The Oilfield (Regulatory and Development) Amendment Bill, 2024 passed by Parliament last week will be a game changer for the exploration and production of oil and gas in India. The bill intends to reform the legal framework and meet the current needs and market conditions to make the sector attractive for investors.
The bill is aimed at fulfilling the vision of Viksit Bharat by 2047 by reducing import dependency in the sector. It will play a key role in ensuring India’s energy availability, accessibility, affordability and security for the country and its people.
The bill has simplified processes, reduced documentation and allows for stable lease conditions for faster approvals of applications and strengthening business confidence.
To attract investment and build investors’ confidence, the bill provides for enhanced contractual stability and flexible arbitration processes to streamline dispute resolutions.
To empower independent private operators and maximise resource utilization, the bill allows infrastructure sharing and lease aggregation.
For small operators tailored measures are provided for equitable access to opportunities, fostering inclusive growth.
The bill facilitates global greenhouse gas (GHG) emission monitoring and comprehensive processes for energy transition and sustainable development
Over the past decade, the government has simplified processes and reduced regulatory issues to promote the exploration and production of oil and gas in the country. To attract investments in the sector the government reformed and shifted from production sharing regime to revenue sharing regime for awarding contracts.
Released previously ‘No Go areas’ for new explorations, deregulated crude exploration and given marketing and pricing freedom for natural gas.
A crucial outcome of these major reforms is that today more than 76 per cent of the active acreage under exploration have been awarded post 2014.
The bill is mainly aimed at ease of doing business through active collaboration between government and contractors. The Bill is designed to meet investors’ expectations whilst promoting, protecting and prioritizing the interests of India.
The bill has separated mining and petroleum operations and introduced a single permit system namely, petroleum leases, which will substitute the existing system which requires the Contractors to take multiple licenses for carrying out various types of activities for different types of hydrocarbons.
The Bill will facilitate the development of comprehensive energy projects and the adoption of new technologies like Carbon Capture utilization and sequestration (CCUS), green hydrogen etc.
Post-2014, the Ministry of Petroleum and Natural Gas has embarked on an accelerated path to monetise discoveries. The discovered small fields policy had been notified in 2015 and many small operators have been awarded fields unmonetised by previous operators. The provision in the bill for sharing infrastructure will aid small operators and improve the viability of isolated oil blocks.
The Bill also aims to resolve one of the biggest grievances of global oil companies interested in investing in India by providing stability in operations, both in terms of tenure of the lease and conditions. It emphasizes efficient alternate dispute resolution mechanisms which will ensure that disputes can be resolved in a timely, fair and cost-effective manner.
To promote enforcement of the provisions of the Act, the penalty has been increased to 25 lakh rupees and up to 10 lakh per day for continuing infractions. To make the system effective and expeditious, the Bill creates an adjudication authority and an appellate mechanism for the levy of penalties.
The Bill intends to maintain cooperative federalism and does not impact the rights of the States in any manner. The States will continue to give Petroleum leases, and necessary statutory clearances and receive royalties, as before.
The bill provisions will improve the “Ease of doing business”, make India an attractive destination for the production of oil and gas and play an instrumental role in unlocking the hydrocarbon potential of India’s rich and natural resources. (ANI)
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