What is the Centre’s new Oilfields Bill? How will it impact India’s petroleum industry? Premium

Oilfields Bill: Parliament debates Oilfields Amendment Bill to boost domestic oil production, reduce imports, and streamline regulatory framework.

The story so far: Parliament’s winter session has remained chilly as a stand-off continues between the Centre and Opposition over the indictment of Indian businessman Gautam Adani by the US Department of Justice (DoJ). The Rajya Sabha had listed the Oilfields (Regulation and Development) Amendment Bill, 2024 for passage on Monday (December 2, 2024), but the Upper House was quickly adjourned for the day without any legislative business being conducted. The Bill had been introduced in the Upper House during the Monsoon session. 

“This Bill aims to ensure policy stability for oil and gas producers and allow international arbitration,” said Union Oil Minister Hardeep Singh Puri while speaking at the Geo India 2024 conference on November 15. Promising private sector companies ‘zero interference’ by the government, Mr. Puri also said that the Bill would enhance India’s domestic output and cut down its reliance on oil imports. 

According to the Centre for Monitoring Indian Economy (CMIE), India’s oil and petroleum imports for the past three quarters have been worth ₹4,121,787.4 million, ₹4,294,979.6 million and ₹3,130,294.1 million respectively. This is worth at least thrice the country’s quarterly oil and petroleum exports.  

“For India to reduce its import dependence, the increase in domestic production must outpace the country’s rapidly growing energy demand,” explains Vivek Rahi, Partner, KPMG in India, adding, “Imports have largely remained unchanged in spite of policy measures aimed at boosting domestic production—such as the Hydrocarbon Exploration and Licensing Policy (HELP), the Discovered Small Fields (DSF) policy, gas pricing reforms, and reduced royalty rates for deepwater, ultra-deepwater, and high-pressure/high-temperature areas.”

Here’s a look at the proposed amendments and how they will affect India’s oil industry.

Currently, the petroleum industry is burdened by delays in obtaining environmental and forest clearances, complexities in land acquisition, absence of comprehensive standards, procedures, and guidelines for operational and safety compliance, explains Mr. Rahi.

“India is believed to hold yet-to-find potential of 13 billion tons of oil equivalent. This bill addresses two critical issues to help India exploit these resources – separation of petroleum and mining activities and expanding the definition of mineral oils,” he says,