Rajya Sabha passes bill to boost investment in oil and gas exploration

Aims to de-link petroleum operations from mining, renewable projects at oilfields

The Rajya Sabha on Tuesday passed a bill that aims to delink petroleum operations from mining, clarify the grant and extension of petroleum leases and create a new dispute resolution mechanism for the exploration and production sector.

 

Passed by a voice vote in the upper House, the Oilfields (Regulation and Development) Amendment Bill, 2024, will replace existing laws dating from 1948, which were last amended in 1969, and brings in the concept of 'petroleum lease', to be legally separate from a mining lease.

 

To be implemented, the bill needs to be passed in the Lok Sabha.

 

Replying to the debate on the bill, Oil 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 own operators but also to foreign investors so that they can come and do business here with a view to benefit everyone," Puri said.

 

Since both crude oil and natural gas is found in the pore spaces of subsurface rocks and is extracted by drilling, the delinking of terms like ‘mine’ ‘quarried’ or ‘excavated’ as referred to in the current Act will remove ambiguity and introduce ease of doing business into the sector which is more technologically driven, Puri stressed.

 

More ease in exploration would be made possible by incorporating a larger set of hydrocarbons in the new bill. Case in point, it introduces the term 'Mineral Oils' in place of 'Oils', and brings a wide range of mineral oils, including shale oil, gas hydrates and coal bed methane under its ambit.

 

Several opposition members demanded the bill be sent to a standing committee for further scrutiny. Opposition member N R Elango (DMK) demanded that the bill must be referred to a select committee arguing the "mining word is being replaced, only to take away the rights of the states".

 

With regards to disputes arising out of petroleum leases or any authorisation granted by the central government for working of an oilfield, the bill proposes the government can bring in “alternative dispute resolution methods under any law for the time being in force, in a place within India or outside India.”

 

On a related note, granting of petroleum lease on stable terms has also been mentioned in the bill. In line with the government's wider push towards decriminalising violations under various business rules, the bill introduces penalties in place of criminal sanctions, calls for adjudication by an adjudicating authority and appeals as against the order of adjudicating authority.

 

Green push

 

It calls for reporting of carbon and greenhouse gas emissions from mineral oil operations and facilitating comprehensive energy projects at oilfields, including renewables such as solar, wind and others. Towards decarbonising efforts, it has also expanded newer technologies such as green hydrogen and carbon capture utilisation and storage (CCUS).

 

The bill aims to “promote and facilitate adoption of measures for reducing carbon and greenhouse gas emissions and decarbonising operations including, but not limited to use of oilfields for other purposes, such as, production of hydrogen, CCUS or coal gasification,” the bill reads.

 

The bill also promotes adequate opportunities for risk mitigation, ensures stability in petroleum exploration, addresses energy transition issues, including next-generation cleaner fuels, the government said.