Rajya Sabha Passes Bill To Boost Investment In Oil And Gas Exploration

New Delhi: The Rajya Sabha on Tuesday passed a bill that seeks to amend existing law governing exploration and production of oil and gas, and delink petroleum operations from mining operations to boost investment in the sector.

The Oilfields (Regulation and Development) Amendment Bill, 2024, introduced in the Rajya Sabha in August this year, was passed by a voice vote.

Replying to the debate on the bill, Oil Minister Hardeep Singh Puri said that the oil and gas sector involves high investment and long gestation period.

"We need oil and gas sector for 20 more years. We need to bring this legislation here to provide a win-win confidence not only to our own operators but also to foreign investors so that they can come and do business here with a view to benefit everyone," Puri said.

He said policy stability, dispute resolution and sharing of infrastructure, especially for small players are new provisions in the bill.

The bill aims to decriminalise some of the provisions of the original 1948, the Oilfields (Regulation and Development) Act, by introducing "penalties, adjudication by an adjudicating authority and appeal as against the order of adjudicating authority".

The bill proposes to introduce 'petroleum lease' and expands 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. This is with a view to raising domestic output and cutting reliance on imports.

Several opposition members demanded that the bill be sent to a standing committee for further scrutiny.

Opposition member N R Elango (DMK) demanded that the Bill must be referred to a select committee saying the "mining word is being been replaced only to take away the rights of the states".

"I want to assure all members that this is not about handing over to the corporate sector, this is not about taking the powers of the states away. The petroleum mining leasing will still have to be granted by state governments, no matter what changes have been brought about," Puri asserted.

“The government has nothing to hide on this and this bill is a win-win for the states," he asserted.

Puri said as India grows economically on the way to become a developed nation by 2047, its energy requirements are increasing and there is a need to enhance the domestic production of oil and gas to meet the rising demand and secure its energy supply.

"We currently produce about 30 million metric tonnes (mmt) of crude oil and 36.5 billion cubic metres of natural gas annually. As against this production we consume 235 mmt of petroleum products and 68 billion cubic metres of natural gas. There is clearly a very large gap between what we produce and what we consume," he said.

Puri lamented that between 2006 and 2016 "virtually nothing was done on the exploration" front, the implications of which are felt currently with domestic production falling.

The minister said all the provisions in the Bill intend "to substantially improve the ease of doing business and make India an attractive destination for enhanced production of oil and gas to monetise our vast reserves." "We want to ensure that investors will have more confidence to come here unlike the dull period between 2006 and 2014. There will be one lease, one licence. If there is dispute then for dispute management there will be predictability and stability." Shaktisinh Gohil (Cong) contested Puri's claim of the previous government not doing anything on the exploration front citing the examples of Mumbai High, Neelam and Heera, which account for ONGC's 59 per cent of production, were built between 1976 and 1984.

He also drew the attention of the minister to a particular clause of the amendment saying it provides "very wide discretional rule-making powers to the central government with respect to petroleum lease".

Asking the government to continue with the existing arbitration provision as per model production sharing contracts, he said the proposed amendment could be seen by international oil and gas companies as a risk where the government has disproportionate power to control and interfere with contractual disputes.

Participating in the debate, Aam Aadmi Party member Sanjay Singh said that BJP leaders promised to lower diesel prices to Rs 40 per litre and petrol to Rs 50 but it was never fulfilled.

He said in 2014 crude oil prices were USD 135 per barrel but neither diesel nor petrol prices reached Rs 100 per litre. When crude oil price dipped to USD 19 per barrel even then petrol and diesel were sold at high rates, he added.

He said that the bill proposes to bring in new investors and encourage big corporate houses in the sector where public sector unit ONGC is making a profit of Rs 40,000 crore.

Treasury bench members interrupted Singh's speech when he praised former Delhi Chief Minister Arvind Kejriwal for giving free electricity, free education, free treatment and cheap petrol and diesel compared to a BJP-ruled state and a union territory.

AIADMK member M Thambidurai expressed concern over the impact of hydrocarbon exploration on farmers in Tamil Nadu.

He said that during the DMK rule, it was hydrocarbon exploration in green fields but the AIADMK chief stopped it later to save farmers in Thanjavur area.

NCP member Fauzia Khan and CPI Member PP Suneer expressed concerns over the decriminalisation of offences under the new bill.

The bill has a provision to impose the highest penalty of Rs 25 lakh and removes clauses related to imprisonment.

"BJP's priority is corporate comfort over the exploitation of our precious natural resources. State-led enterprises like ONGC should be prioritised instead of private players in the sector for the sake of economy and people. ONGC is a competent organisation but the government is aggressively promoting private players in the sector," Suneer said.

BJP member Ghanshyam Tiwari lauded the bill and said that it has been brought under the five pledges taken by Modi government to replace old laws that have the influence of the colonial era.

BJD member Manas Ranjan Mangaraj, BJP members Kalpana Saini, Mahendra Bhatt, Sanjay Seth and Sikander Kumar also participated in the discussion on the bill.

Dola Sen (AITC), Chunnilal Garasiya (BJP) and Yerram Venkata Subba Reddy (YSRCP) also took part in the discussion.