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The Ministry of Petroleum & Natural Gas (MoPNG) on Monday introduced a Bill in Parliament to amend the Oilfields (Regulation and Development) Act, 1948, to enhance the ease of doing business in the exploration and production (E&P) sector.
Through the proposed amendments, the Ministry has introduced ‘petroleum lease’ and has expanded 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. Besides, it also separates mining operations from petroleum operations.
Originally, oilfields, mines and minerals were comprehensively regulated together through the Mines and Minerals (Regulation and Development) Act, 1948. Then in 1957, the Mines and Minerals (Development and Regulation) Act was enacted for development and regulation of mines and minerals.
The original Act (1948) was renamed as Oilfields (Regulation and Development) Act, 1948 and was made applicable to only mineral oils, which the Ministry is now amending to enhance the ease of doing business in the E&P sector.
Ensuring stability
The salient features of the amendments include delinking petroleum operations from mining operations, broadening the scope of ‘mineral oils’, introducing the concept of ‘petroleum lease’ and granting lease on stable terms.
The said amendments will ensure stability, promote adequate opportunities for risk mitigation, address energy transition issues including next-generation cleaner fuels and provides for a robust enforcement mechanism for ensuring compliance.
The amendment aims to meet the “needs and aspirations” of the country for energy access, energy security and energy affordability. Further, there is an urgent and pressing need to increase domestic production of oil and gas to meet the rising demand for energy and reduce import dependence of the country.
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.
The Ministry also seeks to strengthen petroleum operations through rules framed for governing various functional aspects, such as, grants of leases or licences, their extension or renewal, sharing of production and processing facilities including infrastructure and safety at oilfields.
The amendments also provide for efficacious dispute resolution, decriminalising provisions in the said Act by introducing penalties, adjudication by an adjudicating authority and appeal as against the order of adjudicating authority.
It also seeks to create an environment for facilitating energy transition by enabling development of comprehensive energy projects for harnessing wind and solar energy along with mineral oils at oilfields.
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