Petroleum Minister Hardeep Puri, in an X post, said that the amendments will pave the way for India’s quest towards energy security and energy self-sufficiency.
The Oilfields (Regulation and Development) Amendment Bill, 2024, was cleared by the Lok Sabha on Wednesday.
Historic day in India’s quest towards energy security and energy self-sufficiency under the dynamic and firm leadership of PM Sh @narendramodi Ji. Oilfields (Regulation and Development) Amendment Bill 2024 successfully passed in Lok Sabha today! Far-reaching amendments made in… pic.twitter.com/n6cwbNQGa4
— Hardeep Singh Puri (@HardeepSPuri) March 12, 2025
“Far-reaching amendments made to the existing legislation will further strengthen and propel India’s energy sector under the leadership of PM Modi Ji and ensure policy stability, international arbitration, extended lease periods, etc.,” the minister shared in the post.
He added, “The present global energy scenario and the hydrocarbon landscape have dramatically changed. Hence, there was a need to amend the Act to reflect current realities and national priorities, promote Ease of Doing Business (EoDB), decriminalise provisions, and align India’s Exploration and Production (E&P) framework with the practices of competing geographies. By virtue of the fact that we are going to rely on conventional energy for some time, we need to step up our exploration and production activities.”
Simply put, the amendments to the Act propose stability of tenure and stability of terms for oil explorers. The new changes will now lead to greater predictability and stability, ensuring that if the terms of the lease are changed to a disadvantage due to the levy of any new tax, the levy of the same tax will be adjusted against the royalty payable to the government as per the initial contract.
“Utilisation of energy is a reasonably good indicator of economic performance. Today, we are consuming 5.5 million barrels of crude oil per day. Just three and a half years ago, this consumption was 5.0 million barrels. If we continue to grow at the current rate, we will reach 6.5–7.0 million barrels per day. India’s transformation to being #ViksitBharat will require a large amount of energy in all forms. Steps have been taken to enhance India’s energy exploration and production. Earlier, one million sq. km of our sedimentary basin was a ‘No Go’ area. As a result, our import dependence was on the rise. We opened up that one million sq. km out of the 3.5 million sq. km of the sedimentary basin to encourage and enhance domestic crude production,” Puri said.
According to the government, the passage of the amendments is a positive signal to prospective investors.
Notably, 76% of the total area under exploration has come under active exploration only since 2014, and archaic laws were unable to provide the desired protection to explorers.
A crucial implication of the amendments passed by Parliament is that if, in the future, the government proposes to reintroduce a windfall gains tax or decides to levy any new similar tax on exploration and production, companies will not have to bear any additional cost. The same levy will be discharged to the government from the overall royalty payments as decided in the contract at the time of awarding the exploration blocks.
The amendments to the Oilfields (Regulation and Development) Act, 1948, were already passed by the Upper House of Parliament in the winter session held last year. The Bill was earlier passed by the Rajya Sabha on December 3, 2024.
The Bill intends to reform the legal framework to meet current needs and market conditions and to make the sector more attractive to investors so that the exploration and production of oil and gas can be increased further, the Petroleum Ministry said in a statement.
The amendments are a step forward, in addition to many measures taken in the past by the government, including a landmark shift from the ‘production sharing’ regime to the ‘revenue sharing’ regime for awarding contracts, simplified processes, and reduced regulatory burden to promote the exploration and production of oil and gas in India, the release of previously ‘No Go’ areas for new exploration, deregulation of crude, as well as marketing and pricing freedom for natural gas.
A crucial outcome of these major reforms is that more than 76% of the active acreage under exploration in India today has been awarded post-2014.
Puri stated that the present regime, which focuses mainly on licensing, regulatory control, and the collection of royalties, needed reorientation to promote Ease of Doing Business and collaboration between the government and contractors.
He stated that exhaustive discussions with industry leaders, potential investors, and stakeholders were held to understand the pain points in the system. Given the long gestation periods and the very high project risks involved, investors need a legal framework that is simple, stable, and predictable and provides access to an efficient and expeditious dispute resolution mechanism.
“The amendments proposed in the Bill are designed to meet investor expectations while promoting, protecting, and prioritizing the interests of India,” he added.
It is believed that the Amendment Bill seeks to do away with the historically erroneous practice of grouping mining and petroleum operations together.
It also introduces a single permit system, namely petroleum leases, which will replace the existing system requiring contractors to obtain multiple licenses for carrying out various types of activities for different types of hydrocarbons. The Bill will facilitate the development of comprehensive energy projects and the adoption of new technologies like Carbon Capture Utilisation and Sequestration (CCUS), green hydrogen, etc.
According to the government, since 2014, the Ministry of Petroleum and Natural Gas (MoPNG) has embarked on an accelerated path towards monetising discoveries. Towards this goal, the Discovered Small Fields Policy was notified in 2015, and many small operators have been awarded fields that were left unmonetised by previous operators. Many of these isolated fields have suffered due to a lack of infrastructure. This Bill seeks to aid small operators by enabling the sharing of resources and infrastructure between different operators to improve the viability of oil blocks.
The Bill also aims to resolve one of the biggest grievances of global oil companies interested in investing in India by providing stability in operations, both in terms of the tenure of leases and the conditions therein. It emphasizes efficient alternative dispute resolution mechanisms to ensure that disputes can be resolved in a timely, fair, and cost-effective manner.
To promote the enforcement of the provisions of the Act, the penalty has been increased to ₹25 lakh and up to ₹10 lakh per day for continuing infractions so that they have a deterrent effect. To make the system effective and expeditious, the Bill creates an adjudication authority and an appellate mechanism for the levy of penalties.
Puri also shared that the Bill intends to maintain cooperative federalism and does not impact the rights of the states in any manner. The states will continue to grant petroleum leases, issue necessary statutory clearances, and receive royalties, as before.
The minister emphasised that with the passing of the Bill, the provisions will improve the “Ease of Doing Business,” make India an attractive destination for oil and gas production, and play an instrumental role in unlocking the hydrocarbon potential of our resource-rich nation.
ALSO READ: With more oil flooding markets, energy prices likely to come down globally, says Hardeep Puri
