Lok Sabha passes Oilfields Amendment Bill 2024 to encourage investment in E&P projects

The amendments made in the existing legislation would further strengthen and propel India’s energy sector and ensure policy stability, said Hardeep Singh Puri.

With an eye on boosting investment in oil and gas exploration in India, the Lok Sabha has passed the Oilfields (Regulation and Development) Amendment Bill, 2024, on March 12.

Minister of Petroleum and Natural Gas Hardeep Singh Puri said the amendments in the existing legislation would strengthen and propel the energy sector and ensure policy stability, international arbitration, extended leases, among other benefits.

“The present global energy scenario and the hydrocarbon landscape has dramatically changed. Hence, there was a need to amend the Act to reflect current realities, national priorities, promote ease of doing business (EoDB), decriminalize provisions and align India’s exploration and production (E&P) framework with practices of competing geographies,” Puri wrote on his social media handle X.

The bill proposes to introduce ‘petroleum lease’ to separate oil and gas exploration projects from mining, in an effort to resolve complexities around land and environmental clearances, which has often resulted in project delays.

The bill also expands the definition of mineral oils to include crude oil, natural gas, petroleum, condensate, coal bed methane, shale gas and oil, and other varieties, to separate mining operations from petroleum operations.

To better handle disputes and boost investor confidence in India’s oil and gas projects, the bill proposes an alternative resolution method within or outside India. The bill also decriminalises violations by replacing imprisonment with penalties.

“By virtue of the fact that we are going to rely on conventional energy for some time we need to step up our exploration and production activities. Today’s successful passage of the bill will be a constructive and positive step in this direction,” said Puri.

With India’s rising energy needs, the government is opening up exploration areas, which were once termed ‘no-go’ areas, to increase domestic oil and gas production. The latest amendments in the ORD Act are both timely and important as the Indian government on February 11 launched the tenth Open Acreage Licensing Policy (OALP) bidding round, which primarily has offshore blocks on offer.

The Indian upstream companies were awaiting the passing of the bill to partner with global players for advanced technology essential to carry out exploration activities in difficult areas such as deep and ultra-deep water.

State-run exploration companies ONGC and Oil India are actively engaging with International Oil Companies (IOCs) including Shell, TotalEnergies, BP and ExxonMobil to collaborate for exploration projects in India.

“Earlier one million sqkm area of our sedimentary basin used to be a ‘No Go’ area. As a result our import dependence was on a rise. We opened up that one million sqkm out of the 3.5 million sqkm of sedimentary basin to encourage and enhance domestic crude production. This has sent positive signals to prospective investors. 76% of total area under exploration has come under active exploration only since 2014,” Puri added.

As the government aims to become a Viksit Bharat by 2070, India’s energy demand is poised to grow in the coming years. Puri said, given that India’s oil demand continues to grow at the current pace, the country’s demand would rise up to 6.5 to 7 million barrels per day (bpd).

India currently consumes 5.5 million barrels of crude oil in a day. Meanwhile, the country’s dependency on imports for crude oil needs is over 85 percent and stands at around 50 percent for natural gas.

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