Lok Sabha Passes Oilfield (Regulatory and Development) Amendment Bill, 2024

The Lok Sabha passed the Oilfield (Regulatory and Development) Amendment Bill, 2024, on 12th March 2025, after its approval by the Rajya Sabha on 3rd December 2024. The Bill aims to reform the legal framework for the exploration and production of oil and gas in India to attract more investors, boost production, and ensure energy availability, affordability, and security. It aligns with Prime Minister Narendra Modi’s vision of Viksit Bharat by 2047.

Key Highlights of the Amendment Bill

Objective of the Bill

• Reform the outdated legal framework to meet current market conditions.
• Increase oil and gas production and attract more investments.
• Ensure energy security and affordability for citizens.

Major Reforms Introduced

• Shift from ‘Production Sharing’ regime to ‘Revenue Sharing’ regime for awarding contracts.
• Simplification of processes and reduced regulatory burden for exploration and production.
• Deregulation of crude oil and pricing freedom for natural gas.
• Release of previously No-Go areas for new exploration.

Key Provisions of the Amendment Bill

• Separation of Mining and Petroleum Operations: Ends the old practice of treating mining and petroleum operations under the same legal framework.
• Single Permit System: Introduction of a Petroleum Lease to replace multiple licenses for different hydrocarbons.
• Encouragement of New Technologies: Facilitates technologies like Carbon Capture Utilization and Sequestration (CCUS) and Green Hydrogen Production.
• Infrastructure Sharing: Allows small operators to share infrastructure to improve the viability of oil blocks.
• Dispute Resolution Mechanism: Focuses on efficient and cost-effective dispute resolution for global investors.
• Higher Penalties for Violations: Penalty increased to ₹25 lakh and up to ₹10 lakh per day for continuous infractions.
• Adjudication Authority: Establishes an authority and appellate mechanism for imposing penalties.

Impact on Small Operators

• Supports small operators through the Discovered Small Fields Policy (2015).
• Allows sharing of resources and infrastructure to improve the viability of isolated fields.

Protection of State Rights

• The Bill does not affect the rights of states.
• States will continue to issue petroleum leases, grant clearances, and receive royalties as before.

Expected Outcomes

• Improved Ease of Doing Business.
• Boost in foreign and domestic investments in the oil and gas sector.
• Unlocking India’s hydrocarbon potential.
• Enhanced energy security and reduced dependence on imports.