Oilfields Amendment Bill

PWOnlyIAS

March 15, 2025

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

About Oilfields (Regulation and Development) Amendment Bill

Oilfields 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

Aspect Oilfields (Regulation and Development) Act, 1948 Oilfields (Regulation and Development) Amendment Bill.
Purpose Regulates the exploration and extraction of natural gas and petroleum Updating framework to align it with the modern energy needs. 
Lease terms This act provides for a mining lease. Bill replaces the mining lease with a petroleum lease
Mineral oils Limited to petroleum and natural gas. The bill expanded and comprises (i) any naturally occurring hydrocarbon, (ii) coal bed methane, and (iii) shale gas/oil
Decriminalisation Provision of a fine of Rs 1,000, or both in case of violation of rules. Provision of penalty of Rs 25 lakh.

Continued violation will cause Rs 10 lakh per day.

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.

Definition of Mineral Oils

  • Earlier, mineral oils included only petroleum and natural gas.
  • The Bill expands the definition to also include:
    • Naturally occurring hydrocarbons
    • Coal bed methane
    • Shale gas/oil
  • However, it excludes coal, lignite, and helium from this category.

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UDAAN PRELIMS WALLAH
Comprehensive coverage with a concise format
Integration of PYQ within the booklet
Designed as per recent trends of Prelims questions
हिंदी में भी उपलब्ध

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