Oilfields Amendment Bill passed to attract investment, delink petroleum from mining

New Delhi, Dec. 4: The Rajya Sabha on Tuesday passed a bill that seeks to amend existing law governing exploration and production of oil and gas, and delink petroleum from mining operations to boost investment in the sector.

The Oilfields (Regulation and Development) Amendment Bill, 2024, introduced in the Rajya Sabha in August this year, was passed by a voice vote.

Replying to the debate on the bill, Minister Hardeep Singh Puri said that the oil and gas sector involves high investment and a long gestation period.

"We need the 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 operators but also to foreign investors so that they can come and do business here to benefit everyone," Puri said.

He said policy stability, dispute resolution and sharing of infrastructure, especially for small players are new provisions in the bill.

The bill aims to decriminalise some of the provisions of the original 1948, Oilfields (Regulation and Development) Act, by introducing “penalties, adjudication by an adjudicating authority and appeal as against the order of adjudicating authority.”

The bill proposes to introduce a 'petroleum lease' and expands the definition of mineral oils to include crude oil, natural gas, petroleum, condensate, coal bed methane, oil shale, shale gas, shale oil, tight gas, and tight oil and gas hydrate. This is to raise domestic output and cut reliance on imports.

Several Opposition members demanded that the bill be sent to a standing committee for further scrutiny.

Notably, the bill was passed in the Rajya Sabha at a time when there is a hue and cry over oil exploration and drilling Assam’s Hollongopar Gibbon sanctuary.

Amidst growing protests led by local residents, the standing committee of the National Board for Wildlife (NBWL) has deferred its approval for oil exploration in the eco-sensitive zones in the Gibbon Sanctuary by the Vedanta Group.

Puri said as India grows economically on the way to become a developed nation by 2047, its energy requirements are increasing and there is a need to enhance the domestic production of oil and gas to meet the rising demand and secure its energy supply.

"We currently produce about 30 million metric tonnes (MMT) of crude oil and 36.5 billion cubic metres of natural gas annually. As against this production, we consume 235 MMT of petroleum products and 68 billion cubic metres of natural gas. There is a very large gap between what we produce and what we consume," he said.

The Minister said all the provisions in the Bill intend "to substantially improve the ease of doing business and make India an attractive destination for enhanced production of oil and gas to monetise our vast reserves."

- With inputs from news agencies