On Tuesday, 3 December 2024, the Rajya Sabha approved the Oilfields (Regulations & Development) Amendment Bill, 2024. This came as great news for the oil and gas exploration industry as it can boost investment inflow as expected by the experts. The recently passed bill will amend the present/ existing laws, which govern the sector. It will also delink petroleum and mining operations.
What is the purpose of this Bill?
The need for oil and gas is inevitable and at least for the next twenty years, society is going to be heavily dependent on the oil and gas industry products as mentioned by Oil and Gas Minister, Hardeep Singh Puri in this Rajya Sabha debate for this bill. This is where the purpose of the bills lies that the new set of rules will offer a win-win situation for all and even the foreign investors, which can bring in foreign capital inflow in the sector apart from domestic investments.
For attracting foreign investments, and increasing domestic investments, policy stability is required, which this bill ensures, along with extended lease periods, and international arbitration.
Currently, India imports more than 85% of the crude oil used in the country and around 50% of the natural gas. This is a huge concern as the dependency is extreme and thus government wants to reduce the same by attracting more investments in the sector. These reforms in the laws and regulations pertaining to the sector can help in attracting investments, which in turn can reduce the dependency on imports.
In all, the bill if comes into effect, after getting passed in the Lok Sabha can help in enhancing dispute management and resolution in the oil and gas industry, will offer stability in the policies to foster business growth, and will enable and promote shared infrastructure usage. If shared infrastructure usage is implemented then even the smaller businesses in the industry can thrive which in turn will increase production and reduce imports largely.
Key Amendments – Oilfields (Regulations & Development) Amendment Bill 2024
- The Rajya Sabha bill will help in clarifying different terms like “mine”, “excavated” or “quarried” and others, which apply to solid minerals and do not fit with oil and gas exploration that involves drilling. The government is trying to remove any ambiguities so that it eases business operations and attracts foreign investment in the oil and gas industry. These terms will be replaced by “petroleum lease” which can give the investors and businesses more clarity.
- The definition of “mineral oil” will also be updated if this bill is passed in the Lok Sabha. The new definition will include shale gas, gas hydrates, coal bed methane, and other unconventional hydrocarbons under the definition of mineral oils. This amendment bill 2024 is to ensure and enhance potential production, and new resource discovery with the inclusion of advanced technology.
- There can be alternate dispute resolution mechanisms as well for efficient and quick dispute resolution to cater to investors’ expectations and requirements.
- The bill also proposes the removal of the imprisonment provision under the original 1948 Act. Fines and monetary penalties will replace this and Adjudication Authority, which the bill wants to introduce, will handle the dispute.
Wrapping up
While the bill is passed in the Upper House, now it is to see when it is cleared in the Lok Sabha to be implemented. The need for these changes as per the Oilfields (Regulations & Development) Amendment Bill 2024 is the need of the hour to boost the investment in the sector as indicated by the Oil and Gas Minister.
Source: BusinessStandard
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