The Oilfields (Regulation and Development) Amendment Bill, 2024 passed by the Rajya Sabha recently now awaits the approval of the Lower House. Parliament's winter session is set to conclude on December 20. The Indian upstream companies including ONGC and Oil India would be the biggest gainers from this amendment.

The bill tabled in August by Petroleum and Natural Gas Minister Hardeep Singh Puri was approved by the Rajya Sabha on December 5. The bill aims to facilitate investments in India’s oil and gas exploration projects. The proposed new law will replace the existing Oilfields (Regulation and Development) Act of 1948, which was last amended in 1969.

"The objective of the changes to the Oilfields Act is to create a more investor-friendly environment and enhance the global competitiveness of future oilfield contracts by addressing long-standing concerns of exploration companies," said Rahul Chauhan, upstream technical research country lead at S&P Global Commodity Insights.

Aimed at boosting investments in the sector, the bill proposes to introduce ‘petroleum lease’ to separate oil and gas exploration projects from mining for resolving complexities around land and environmental clearances, which has often resulted in project delays.

The bill also expands the definition of mineral oils to include crude oil, natural gas, petroleum, condensate, coal bed methane, oil shale, shale gas, shale oil, tight gas, tight oil and gas hydrate, and separates mining operations from petroleum operations.

To better handle disputes and boost investor confidence in India’s oil and gas projects, the bill proposes that the government could bring in alternative resolution methods within or outside India. The bill also decriminalises violations by replacing imprisonment with penalties.

The state-run oil and gas explorer ONGC has the largest upstream operations in the country. However, the company has been unable to boost production from its current fields and has been seeking collaboration with foreign players primarily for technology transfer.

The company’s blocks in deep-water and ultra-deep water such as in the Andamans are expected to have large hydrocarbon reserves. To carry out exploration operations in such blocks, ONGC is looking at partnerships with foreign players such as TotalEnergies, Chevron and ExxonMobil for high-end technologies.

In the second quarter of FY25, crude oil production of ONGC showed a mere growth of 0.7 percent from last year. Meanwhile, the company’s gas production declined to 2.1 percent in the same period.

Oil India Limited (OIL)

Similarly, state-run Oil India is also awaiting partnership with a global oil giant for deep water exploration expertise. The company also has offshore blocks in the Andamans and is eyeing bidding opportunities in the region to increase production.

Contrary to ONGC, Oil India’s crude oil output in the second quarter of fiscal 2024-25 grew by almost 5 percent from last year and gas output by nearly 4 percent in the three months.

Private players

The exploration activities in the country are majorly dominated by the oil PSUs, but private companies such as Reliance Industries Limited (RIL), Cairn Oil and Gas and Essar Oil and Gas are also active players. Cairn has a block in Rajasthan’s Barmer district while Essar is into coal bed methane (CBM) extraction.

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