Rajya Sabha Passes Oilfields (Regulation and Development) Amendment Bill, 2024

New Delhi, December 3: The Oilfields (Regulation and Development) Amendment Bill, 2024, which seeks to expand the definition of mineral oils to include petroleum and natural gas, was passed in the Rajya Sabha on Tuesday.

The bill, introduced by Union Petroleum and Natural Gas Minister Hardeep Singh Puri, aims to regulate the exploration and extraction of natural gas and petroleum. The amendment broadens the definition of mineral oils to incorporate petroleum, natural gas, coal bed methane, and shale gas/oil. However, it clarifies that mineral oils will exclude coal, lignite, or helium.

In addition, the amended bill introduces the concept of petroleum leases, which will cover various activities such as exploration, prospecting, production, making merchantable, and disposal of mineral oils. Prospecting, the initial stage in searching for oil and gas fields, will involve assessing potential petroleum accumulations across large areas.

The bill replaces the mining lease system with a petroleum lease system to cover similar activities, although existing mining leases granted under the old Act will remain valid.

The amendment empowers the central government to establish rules on a variety of matters, including regulating the grant of leases, lease terms and conditions, conservation and development of mineral oils, and the manner of collecting royalties, fees, and taxes. The central government will also set rules concerning the merger and combination of petroleum leases, the sharing of production and processing facilities, and environmental protections aimed at reducing emissions. Alternative dispute resolution mechanisms related to petroleum leases are also included in the new bill.

Regarding violations of the rules, the bill proposes to increase the punishment and penalty. The fine for violations will rise from Rs 1,000 to Rs 25 lakh. For cases of exploring, prospecting, and producing oil without a valid lease, the penalty will be Rs 25 lakh, with continued violations attracting a penalty of Rs 10 lakh per day.

To resolve disputes, the central government will appoint an officer of joint secretary rank or above for the adjudication of penalties. Appeals can be made to the Appellate Tribunal as specified in the Petroleum and Natural Gas Board Regulatory Board Act, 2006.