The winter session of Parliament set to begin on November 25 is of special interest to the oil and gas industry as it awaits the approval of the Oilfields (Regulation and Development) Amendment Bill, 2024. Once passed, it is expected to provide policy stability and promote ease of doing business in the sector.
The bill tabled in the Rajya Sabha by petroleum and natural gas minister Hardeep Singh Puri on August 5 aims to facilitate investments in India’s oil and gas exploration projects. The proposed new law will replace the existing Oilfields (Regulation and Development) Act of 1948, which was last amended in 1969.
To resolve the issue of stagnant domestic oil and gas production, the government is working to bring in necessary investments and technology. India’s largest player in the hydrocarbons exploration segment, Oil and Natural Gas Corporation (ONGC) said international companies such as Chevron are interested in working with the company but are waiting for the passing of the bill.
“Every major oil company is waiting for the ORD Act to be passed, which we expect to be taken up in the winter session... We had a visit by the Chevron team, the ExxonMobil team, and they had met the government officials too," said Sushma Rawat, ONGC's director, exploration, adding that the foreign entities are awaiting clarity more on the policy side before they decide on partnering with Indian companies. "We are still engaging with the companies such as Chevron, Exxon and Shell. They are interested not only in exploration, but also in the discoveries which have not been monetised,” Rawat told Moneycontrol.
What changes do the new bill bring?
Aimed at boosting investments in the sector, the bill proposes to introduce ‘petroleum lease’ to separate oil and gas exploration projects from mining for resolving 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, oil shale, shale gas, shale oil, tight gas, tight oil and gas hydrate, and separates mining operations from petroleum operations.
To better handle disputes and boost investor confidence in India’s oil and gas projects, the bill proposes that the government could bring in alternative resolution methods within or outside India. The bill also decriminalises violations by replacing imprisonment with penalties.
Additionally, the bill addresses green energy transition by creating an environment for facilitating energy transition by enabling the development of comprehensive energy projects for harnessing wind and solar energy along with mineral oils at oilfields.
The bill says: “In order to unlock valuable mineral oil resources, it is necessary to attract investment in the sector to infuse necessary capital and technology for expediting petroleum operations in the country by creating an investor-friendly environment that promotes ease of doing business, prospects for exploration, development and production of all types of hydrocarbons, ensures stability, promotes adequate opportunities for risk mitigation, addresses energy transition issues including next-generation cleaner fuels and provides for a robust enforcement mechanism for ensuring compliance of the provisions of the said Act.”
India’s energy needs
As India progresses towards the vision of ‘Viksit Bharat’ by 2070, the country's energy requirements are expected to jump. To reduce reliance on oil and gas imports, the government is keen to invite foreign players to invest in the sector for both technology and capital.
India is currently dependent on imports of crude oil for over 85 percent of its domestic requirements and around 50 percent for natural gas.
Amid stagnant domestic production in the country, India’s oil exploration companies have been looking forward to foreign partnerships primarily for technology sharing to boost production. In the current fiscal till October, India’s crude oil production has increased by around 3.2 percent while natural gas production was up by 1.1 percent from last year.
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