The Lok Sabha passed the Oilfield (Regulatory and Development) Amendment Bill, 2024, on Wednesday, marking a significant step in reforming India’s oil and gas sector. The bill, earlier passed by the Rajya Sabha on December 3, 2024, aims to modernize the regulatory framework to attract more investment and boost exploration and production in the oil and gas industry.
The amendments are designed to enhance energy availability, accessibility, affordability, and security, contributing to India’s long-term goal of becoming a developed nation by 2047, in line with Prime Minister Narendra Modi’s vision of “Viksit Bharat.”
The bill reflects the government’s ongoing efforts to reform the oil and gas sector, including a shift from the “production sharing” regime to a “revenue sharing” model for awarding contracts, simplifying procedures, and reducing the regulatory burden. Since 2014, over 76% of the active exploration acreage in India has been awarded under these reforms.
Introducing the bill, Petroleum and Natural Gas Minister Hardeep Singh Puri emphasized the need to shift from a licensing-focused system to one that promotes ease of doing business and encourages collaboration between the government and contractors. He highlighted the importance of a simple, stable, and predictable legal framework to attract investors, given the high risks and long gestation periods in the sector.
Key provisions of the bill include replacing the outdated practice of treating mining and petroleum operations alike and introducing a single permit system—petroleum leases—streamlining the licensing process for different types of hydrocarbons. The bill also promotes the adoption of new technologies, such as carbon capture, utilization, and storage (CCUS) and green hydrogen.
The bill addresses challenges faced by smaller operators, including infrastructure constraints, by enabling resource and infrastructure sharing between operators. It also strengthens investor confidence by offering operational stability, a more efficient dispute resolution mechanism, and increased penalties for non-compliance to ensure enforcement of the law.
Puri reiterated that the bill upholds cooperative federalism, ensuring that states retain their rights to grant petroleum leases, clearances, and royalties. He said that the bill would improve the ease of doing business in India, make the country more attractive for oil and gas production, and help unlock the full potential of India’s hydrocarbon resources.
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