Decoded: What does the Oilfields Bill 2024 mean for India's energy sector?

The Oilfields (Regulation and Development) Amendment Bill broadens the scope of mineral oils to include hydrocarbons such as crude oil, natural gas, petroleum, shale gas, oil etc

The Lok Sabha passed the Oilfields (Regulation and Development) Amendment Bill, 2024 on March 12, 2025, marking a significant step in modernising India’s oil and gas sector. The Bill seeks to update the Oilfields (Regulation and Development) Act, 1948, bringing clarity to resource governance, attracting private investment, and addressing environmental concerns.

 

Key changes introduced in the bill 

The scope of mineral oils have been broadened by the amendment to include hydrocarbons such as crude oil, natural gas, petroleum, condensate, coal bed methane, shale gas, and oil. However, it explicitly excludes coal, lignite, and helium, likely because these are governed under the Mines and Minerals (Development and Regulation) Act, 1957.

   

The Bill replaces the term ‘mining leases’ with ‘petroleum leases’, which will now govern exploration, production, and disposal activities. This change aims to streamline environmental and land clearances, which have often caused delays in oil and gas projects. The Bill clarifies that existing mining leases issued under the 1948 Act will remain valid and unchanged. 

 

The violations of the Oilfields Act, 1948, could previously result in imprisonment of up to six months or a fine of ₹1,000, or both. The new Bill replaces imprisonment with financial penalties, increasing the maximum fine to ₹25 lakh. If violations continue, an extra fine of up to ₹10 lakh per day may be imposed. The move shifts the focus from criminal prosecution to financial deterrents for non-compliance.

 

What are the objectives of the bill? 

The government aims to use this Bill to strengthen domestic oil and gas production, reducing dependence on imports. Currently, India imports over 85 per cent of its crude oil and about 50 per cent of its natural gas, making energy security a critical issue. Further, the Bill seeks to attract private investment into petroleum production while ensuring that the rights of existing leaseholders are not compromised. 

 

Greater central government control 

The Bill grants the Central government greater rule-making powers to regulate various aspects of petroleum leases, which included the merging of petroleum leases for operational efficiency, the sharing of infrastructure facilities among leaseholders, and the obligations of lessees to protect the environment and reduce emissions. It also introduces alternative dispute resolution mechanisms, allowing conflicts to be settled either within India or internationally.

 

A new system for handling penalties has been introduced, with an officer of Joint Secretary rank or higher being appointed to adjudicate financial violations. Appeals against their decisions will be directed to the Appellate Tribunal under the Petroleum and Natural Gas Regulatory Board (PNGRB) Act, 2006. If further appeals are needed, cases will be heard by the Appellate Tribunal for Electricity, which operates under the Electricity Act, 2003.

 

Potential concerns of the oil regulation bill 

One of the major concerns is whether the shift from mining leases to petroleum leases could affect states’ taxation powers under Entry 50 of the State List in the Indian Constitution.

 

The Supreme Court ruling in Mineral Area Development Authority vs Steel Authority of India (2024) reaffirmed that states have exclusive power to tax mining activities. Critics argue that the Bill could lead to disputes over revenue-sharing and jurisdiction between states and the Centre since ‘Entry 53 of the Union List’ gives the central government control over oilfields. 

 

With the Bill promoting greater private sector involvement, some critics argue that it may weaken environmental safeguards. The new financial penalties replace imprisonment, which could reduce accountability for environmental violations and safety lapses in oilfields.

 

Meanwhile, Opposition parties have raised concerns that government-owned enterprises like ONGC should be prioritised over private companies for oil exploration and production. There are fears that increased private participation could prioritise profit-making over community welfare and long-term sustainability.

 

What are the Centre’s plans? 

Union Petroleum Minister Hardeep Singh Puri defended the Bill, stating that it is a ‘constructive and positive step’ toward boosting India’s oil and gas production. He highlighted the government’s commitment to opening up new exploration areas, including those previously classified as ‘no-go zones’.

 

Additionally, the Bill aligns with the government’s energy security strategy, particularly after the launch of the 10th Open Acreage Licensing Policy (OALP) bidding round on February 11, 2025. The primary focus of the policy is primarily offshore exploration blocks.

 

Puri also noted that India’s crude oil demand is expected to rise to 6.5-7 million barrels per day (bpd) from the current 5.5 million bpd, emphasising the urgency of strengthening domestic production.