Recently, Lok sabha passed the Oilfields (Regulation and Development) Amendment Bill. 

About Oilfields (Regulation and Development) Amendment Bill

• The Bill was introduced in Rajya Sabha on August 5, 2024.
• It amends the Oilfields (Regulation and Development) Act, 1948, which regulates the exploration and extraction of petroleum and natural gas.
• Nodal ministry: Ministry of Petroleum and Natural Gas
• Objective of the Bill:
• • To modernize the legal framework for oil and gas exploration and production.
  • To attract more investment by making the sector more business-friendly.
  • The Bill aligns with the government’s vision of Viksit Bharat by 2047 by ensuring energy availability, affordability, and security.

Key Reforms Introduced

• Simplification of Licensing
  
  • The Bill removes the requirement for multiple licenses for different hydrocarbons.
  • Introduces a single permit system called petroleum leases.
• Separation of Mining and Petroleum Operations
  
  • Ends the old practice of treating mining and petroleum exploration under the same rules.
  • Allows better regulation of the oil and gas sector.
• Encouraging Investment and Ease of Doing Business
  
  • Ensures a stable and predictable legal framework for investors.
  • Introduces a faster dispute resolution system for resolving conflicts efficiently.
  • Aims to reduce regulatory burdens and promote collaboration between the government and contractors.
• Technology and Energy Innovation
  
  • Supports new energy technologies such as:
    • Carbon Capture Utilization and Sequestration (CCUS)
    • Green hydrogen projects
• Support for Small Oil Operators
  • Post-2014, the government accelerated oil and gas monetization.
  • The Discovered Small Fields Policy (2015) enabled small operators to manage unutilized fields.
  • Many fields lacked infrastructure, so the Bill allows resource-sharing between different operators to improve project viability.
• Stronger Penalties and Enforcement
  • Fines increased to ₹25 lakh and up to ₹10 lakh per day for ongoing violations.
  • New adjudication authority and appellate mechanism introduced for handling penalties efficiently.
• No Impact on States’ Rights
  • The Bill upholds cooperative federalism.
  • States will continue to grant petroleum leases and collect royalties as before.

Oilfields (Regulation and Development) Act, 1948 vis i vis Oilfields (Regulation and Development) Amendment Bill

Impact of the Bill

• Simplifies oil and gas regulations by replacing outdated systems.
• Encourages investment with a stable and transparent legal framework.
• Strengthens environmental accountability for petroleum operations.
• Removes criminal penalties and ensures a more efficient penalty system.
• Creates a structured dispute resolution mechanism for lease-related conflicts.

Shortcomings of the Bill

• No Clear Vision for Energy Independence
  • The Bill lacks a long-term plan to make India self-sufficient in energy.
  • It does not outline steps to reduce dependence on oil imports or boost domestic production.
• No Incentives for Small Oil and Gas Explorers
  • The Bill does not offer benefits or support for independent oil and gas companies.
  • This may discourage smaller players from entering the sector.
• Untapped Potential of Shale Oil and Gas
  • India has large reserves of shale oil and gas in areas like Cambay, Krishna Godavari, and Kaveri Basin.
  • The Bill does not include a strategy to develop these resources efficiently.
• Only Minor Adjustments Instead of Major Reforms
  • The Bill mainly makes technical changes rather than introducing big reforms.
  • It does not bring new policies to boost domestic oil and gas production.
• No Comprehensive Energy Strategy
  • The Bill does not connect oil, gas, and renewable energy into a unified plan.
  • There is no roadmap for long-term energy security by 2050 or 2060.

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