India to tweak law to ease doing upstream business

India has introduced legislation in the upper house of parliament to amend an existing law to enhance the ease of doing business in the exploration and production sector.

The oil and gas ministry has proposed a "petroleum lease" for exploration and production of mineral oils. It has also expanded the definition of mineral oils to include crude, natural gas, petroleum, condensate, coal-bed methane, oil shale, shale gas, shale oil, tight gas, tight oil and gas hydrate.

The legislation proposes to separate mining operations from petroleum operations, which were originally regulated together. It also proposes to grant the petroleum lease on stable terms where its terms will not be altered to the disadvantage of the lessee during the period of the lease, while allows sharing of production facilities and infrastructure.

The proposed amendments also include effective dispute resolution, decriminalising some provisions by replacing imprisonment with financial penalties and allowing appeals against the orders of the ruling authority.

It also aims to ease energy transition by enabling development of comprehensive energy projects for harnessing wind and solar energy, along with mineral oils at oil fields. It has provisions to use oil fields for production of hydrogen, carbon capture utilisation and storage or coal gasification.

The bill has to be passed by both houses of parliament to become law.

India has been trying to attract domestic and international investors in the exploration sector by working to promote the ease of doing business in the sector. It also wants to increase domestic output of oil and gas to meet the country's increasing energy demand and reduce dependence on imports.

India's crude production during April-June fell by 2pc from a year earlier to 538,000 b/d, oil ministry data show. Its dependence on crude imports for this period eased to 88.3pc from 88.8pc a year earlier.

India will offer 25 oil and gas blocks in the tenth upstream bidding round in August or September. It has extended the deadline for the ninth round three times, with the latest to 31 August. Foreign participants have raised key issues with the oil ministry, including those related to indemnity and compensation that are likely to be addressed in the new legislation. Hydrocarbon exploration has been lacking because of the slow implementation of policies.

India's upstream licensing has largely been dominated by domestic participants. Indian state-controlled upstream firm ONGC in January won seven of the 10 areas in exploration blocks offered in the eighth upstream bidding round. A private-sector consortium of Reliance Industries and BP, state-controlled upstream firm Oil India and private-sector Sun Petrochemicals received one block each.

By Roshni Devi