India’s oil and gas industry is set for a significant transformation following the passage of the Oilfield (Regulatory and Development) Amendment Bill, 2024 in Parliament last week. The bill seeks to overhaul the legal and regulatory framework of the sector to address current market dynamics and attract investment, thereby positioning India to meet its energy demands sustainably and efficiently.
Aimed at achieving the vision of a Viksit Bharat (Developed India) by 2047, the bill seeks to reduce the nation’s dependency on oil imports. It promises to enhance energy availability, affordability, and security, ensuring that the country remains well-positioned to meet its future energy needs.
The new legislation introduces several key reforms designed to streamline operations, increase transparency, and improve the ease of doing business. Notably, the bill simplifies processes, reduces paperwork, and offers stable lease conditions to speed up the approval of applications. These changes are expected to foster a more investor-friendly environment, bolstering confidence in the sector.
To further encourage investment, the bill provides for enhanced contractual stability, with flexible arbitration processes for resolving disputes swiftly and fairly. Additionally, the provision for infrastructure sharing and lease aggregation will empower independent private operators, maximizing resource utilization and efficiency.
Small operators will also benefit, as the bill includes tailored provisions to ensure equitable access to opportunities, promoting inclusive growth within the industry. Another significant aspect of the bill is its focus on sustainable development, enabling global greenhouse gas (GHG) emission monitoring and facilitating India’s energy transition.
Over the last decade, the Indian government has made considerable strides in simplifying regulations to support oil and gas exploration. Reforms such as shifting from a production-sharing regime to a revenue-sharing model for awarding contracts, deregulating crude exploration, and granting marketing and pricing freedom for natural gas have significantly transformed the sector. As a result of these reforms, over 76 percent of the active acreage under exploration has been awarded post-2014.
At its core, the bill is about improving the ease of doing business, fostering collaboration between the government and contractors. It aims to meet investors’ expectations while prioritizing the country’s interests. One of the most notable provisions is the introduction of a single permit system—petroleum leases—that replaces the multiple licenses previously required for various hydrocarbon-related activities.
The bill also supports the development of advanced energy technologies such as Carbon Capture Utilization and Sequestration (CCUS) and green hydrogen, which are essential for India’s long-term energy strategy.
Additionally, the bill addresses the needs of small operators by promoting the sharing of infrastructure, thereby enhancing the viability of isolated oil blocks and supporting their growth. This provision is expected to play a crucial role in the government’s efforts to monetize previously unexploited discoveries.
The amendment bill also tackles one of the primary concerns of global oil companies: operational stability. By offering greater stability in lease tenure and operational conditions, along with efficient alternative dispute resolution mechanisms, the bill ensures that any issues that arise can be resolved in a timely and cost-effective manner.
To enforce the provisions of the Act, penalties have been significantly increased, with fines of up to 25 lakh rupees and daily fines of up to 10 lakh rupees for continuing violations. The bill also establishes an adjudication authority and an appellate mechanism to ensure that penalties are levied and disputes are addressed swiftly.
Importantly, the bill preserves the principle of cooperative federalism, as it does not alter the rights of states. States will continue to grant petroleum leases, provide necessary clearances, and receive royalties as per existing arrangements.
In conclusion, the Oilfield (Regulatory and Development) Amendment Bill, 2024, represents a major step toward transforming India’s oil and gas sector. By enhancing the ease of doing business and creating a more stable and transparent regulatory environment, it will attract investment, unlock the country’s hydrocarbon potential, and ensure a secure and sustainable energy future for India.