The Rajya Sabha on Tuesday passed the landmark amendments to the Oilfields (Regulation and Development) Act, 1948 to facilitate the ease of business and speed up the development of India’s rapidly growing energy sector.

Hailing this as “a historic step into the future”, Minister for Petroleum and Natural Gas Hardeep Singh Puri said: “The epochal amendments proposed will further strengthen and propel India’s energy sector under the leadership of Prime Minister Narendra Modi, and ensure policy stability, international arbitration, extended lease periods etc.”

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Since petroleum (crude oil/ natural gas) is found in the pore spaces of subsurface rocks and is extracted by drilling, delinking of terms like ‘mine’ ‘quarried’ or ‘excavated’ as referred to in the current Act will remove ambiguity and introduce Ease of Doing Business into the sector which is more technologically driven, the minister said.

The term ‘mineral oil’ is traditionally understood to be natural gas and petroleum.

As unconventional hydrocarbon resources have been discovered and developed, the definition needs to be updated to reflect the modern understanding of the term, the minister pointed out.

The definition of a mining lease is being amended to clarify that leases granted prior to the commencement of the Oilfields (Regulation and Development) Amendment Act will be called mining leases. Thereafter, the use of said terminology will be discontinued and the term petroleum lease as defined in clause (f) shall be used.

To encourage investors for holistic development of the field including planning for proper reservoir management practices as well as confidence to induct capital-intensive Enhanced Recovery methods. The provision seeks to empower the government to make rules for protecting the environment and promoting the development of green energy projects and the adoption of energy transition measures to enable the government and the companies to achieve their climate vision.

Minister Puri also pointed out that small operators and new entrants often face difficulties in carrying out operations due to the high costs of infrastructure and facilities. This provision enables the government to make rules to enable the sharing of production and processing facilities and other infrastructure by two or more lessees. The proposed amendments provide for a proper mechanism for the levy of penalties as well as for the handling of appeals arising therefrom with the formation of adjudication authority, mechanisms and appeals, he added.