In News:

To encourage domestic production of petroleum and other mineral oils, along with private investment in these sectors to reduce import dependence, the Rajya Sabha passed the Oilfields (Regulation and Development) Amendment Bill, 2024.

Key Details:

• Objective:
  • Encourage domestic petroleum production.
  • Reduce import dependence by promoting private investment in the oil sector.
• Key Amendments:
  • Delinking petroleum from mining:
    • The Bill separates petroleum and mineral oil production from mining activities.
    • The Oilfields (Regulation and Development) Act, 1948, is amended to focus on mineral oils, distinct from the Mines and Minerals (Development and Regulation) Act, 1957.
  • Expanded Definition of Mineral Oils:
    • Includes hydrocarbons in various forms (natural gas, crude oil, petroleum, coal bed methane, and shale gas/oil).
    • Excludes coal, lignite, and helium from the definition (falling under the Mines and Minerals Act).
  • Petroleum Lease:
    • Replaces the term "mining lease" with "petroleum lease."
    • Covers activities such as exploration, development, production, and transportation of mineral oils.
  • Private Investment:
    • Provisions to attract private investment by clarifying rules for petroleum leases.
    • Current mining leases remain valid without altering terms to the lessee's disadvantage.
  • Decriminalization and Penalties:
    • Replaces criminal punishment with financial penalties.
    • Fines can go up to Rs. 25 Lakh, with additional penalties for ongoing violations.
  • Rule-making Power of Central Government:
    • Expands the Centre's authority over petroleum lease regulations, conservation, royalties, mergers, facility sharing, environmental protection, and dispute resolution.
• Significance of the Bill:
  • Energy Access and Security: Ensures energy security by boosting domestic production.
  • Attracting Investment: Creates a conducive environment for private sector investment.
  • Environmental Safeguards: Provisions to control carbon emissions and promote renewable energy in oilfields.
• Opposition Criticism:
  • State Rights on Mining: Concerns raised by opposition parties, particularly the DMK, about the reduction of state control over resource taxation (taxing mineral rights).
  • Impact on Federal Balance: States traditionally manage mining rights under the Constitution’s State List (Entry 50). The Bill may shift control to the Union List (Entry 53), creating constitutional concerns.
  • Environmental Concerns:
    • Opposition figures like P.P. Suneer (CPI) argue for prioritizing public companies like ONGC, fearing privatization may worsen environmental governance.
• Adjudication of Disputes:
  • Appeals against penalty decisions will be handled by the Appellate Tribunal, as per the Petroleum and Natural Gas Regulatory Board Act, 2006.
• Broader Significance:
  • Energy Independence: Reduces reliance on fuel imports, fostering energy security and economic stability.
  • Regulation: Strengthens the enforcement mechanism for petroleum operations while encouraging private participation.

Petroleum and Natural Gas Regulatory Board (PNGRB):

• Formation: Established under the Petroleum and Natural Gas Regulatory Board Act, 2006.
• Functions: Regulates refining, transportation, distribution, storage, marketing, and sale of petroleum products and natural gas.
• Role in the Bill: Ensures competitive markets for gas and handles appeals regarding regulatory decisions.