Rajya Sabha passes bill to promote investment in oil and gas exploration | Key amendments

The Rajya Sabha on Tuesday passed the Oilfields (Regulation and Development) Amendment Bill, 2024, to promote investments in oil and gas exploration by amending the existing laws governing the sector and delinking petroleum operations from mining activities.

The bill, introduced in the Upper House in August, was passed by a voice vote. It seeks to provide policy stability, enhance dispute resolution mechanisms, and enable shared infrastructure usage, especially for smaller players, to encourage greater participation in the sector.

Replying to the debate on the bill, Oil Minister Hardeep Singh Puri said that the oil and gas sector involves high investment and long gestation period.

"We need oil and gas sector 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 view to benefit everyone," Puri said.

The bill introduces a 'petroleum lease' in place of the traditional 'mining lease,' expands the definition of mineral oils to include unconventional hydrocarbons like shale gas and coal bed methane, and decriminalises certain provisions under the original 1948 Act.

India currently imports over 85% of its crude oil needs and about 50% of its natural gas, a dependency the government hopes to reduce by fostering domestic production through these reforms.

Several opposition members, however, demanded the bill be sent to a parliamentary standing committee for further deliberation.

Puri assured the House that the amendments were designed to offer policy stability and ensure clarity for investors.

"We want to ensure that investors will have more confidence to come here unlike the dull period between 2006 and 2014. There will be one lease, one licence. If there is dispute then for dispute management there will be predictability and stability," the minister said.

The bill "aims to ensure policy stability for oil and gas producers and allow international arbitration and extend lease period" over areas for producing fossil fuels, he added.

Key amendments to Oilfields (Regulation and Development) Act

• The bill clarifies that terms like "mine," "quarried," or "excavated"—applicable to solid minerals—do not align with the nature of oil and gas exploration, which involves drilling. By replacing these with "petroleum lease," the government seeks to remove ambiguities, simplifying regulations and improving ease of doing business.

• The bill updates the definition of “mineral oils” to include unconventional hydrocarbons such as shale gas, coal bed methane, and gas hydrates. Puri noted this would ensure regulations reflect advancements in technology and resource discovery, boosting production potential.

• Amendments propose alternate dispute resolution mechanisms for efficacious dispute resolution methods to investors’ needs and expectations.

• The bill removes provisions for imprisonment under the original 1948 Act, replacing them with monetary penalties and introducing an adjudication authority to handle disputes.