Page 48 - Policy Economic Report_Mar'25

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Key Policy developments/Significant news in Energy sector

Oilfield (Regulatory and Development) Amendment Bill passed in Lok Sabha

Lok Sabha passed the Oilfield (Regulatory and Development) Amendment Bill, 2024. The Bill was earlier
passed by the Rajya Sabha on 3rd December, 2024. The Bill intends to reform the legal framework to
meet the current needs and market conditions and to make the sector more attractive to investors so
that exploration and production of oil and gas could be increased further. The Bill will play a key role in
India’s quest for ensuring energy availability, accessibility, affordability and security for the citizens and
fulfilling the Hon’ble Prime Minister’s vision of Viksit Bharat by 2047.

Over the last decade, the Government has brought several path breaking reforms including a landmark
shift from ‘production sharing’ regime to ‘revenue sharing’ regime for awarding contracts, simplified
processes and reduced regulatory burden to promote exploration and production of oil and gas in India,
release of previously No-Go areas for new exploration, deregulation of crude as well as marketing and
pricing freedom for natural gas. A crucial outcome of these major reforms, more than 76% of the active
acreage under exploration in India today have been awarded post 2014.

While introducing the historical amendment Bill, the biggest of such path breaking legal reforms,
Hon’ble Minister of Petroleum and Natural Gas Sh. Hardeep Singh Puri stated that the present regime,
focussing mainly on licensing, regulatory control and collection of royalties, needed reorientation to
promote Ease of Doing Business and collaboration between the Government and the Contractors. He
stated that exhaustive discussions with industry leaders, potential investors and stakeholders were held
to understand the pain points in the system. Given the long gestation periods and very high project risks
involved, investors need a legal framework that is simple, stable, predictable and provides access to
efficient expeditious dispute resolution mechanism. The amendments proposed in the Bill are designed
to meet investor expectations whilst promoting, protecting and prioritizing the interests of India.

The Amendment Bill seeks to do away with the historical erroneous practice of putting mining and
petroleum operations in the same bucket. It also introduces a single permit system namely, petroleum
leases, which will substitute the extant 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
development of comprehensive energy projects and adoption of new technologies like Carbon Capture
utilization and sequestration (CCUS), green hydrogen etc.

Post 2014, MoP&NG has embarked on an accelerated path towards monetising discoveries. Towards
this goal, the discovered small fields policy had been notified in 2015 and many small operators have
been awarded fields unmonetised by previous operators. Many of these isolated fields have been
suffering for want of infrastructure. This Bill seeks aid small operators by enabling sharing of resources
and infrastructure between different operators to improve viability of 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 therein.

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