On April 15, Hardeep Singh Puri, Minister of Petroleum and Natural Gas, said “The Indian hydrocarbon sector is entering a new era of accelerated exploration and development.” He said this while addressing the Open Acreage Licensing Policy (OALP) Round-IX and Special Discovered Small Field (DSF) Signing Ceremony.
He highlighted that through investor-friendly reforms, swift approvals, scientific exploration, and a strong emphasis on sustainability, India is steadily building a resilient and future-ready energy eco-system aligned with the vision of Viksit Bharat. Yes, Indian hydrocarbon space has seen shift in policy with changing times, but the results re yet to seen.
That India has not seen another big discovery is an matter of another debate. But there is a consistency in policy reforms, but execution is the pain point.
Puri had also pointed out that India is currently reliant on imports for 88 per cent of its crude oil and 50 per cent of its natural gas needs, and that the urgency for domestic exploration and production has never been greater. The Minister reiterated, “In the next two decades, 25 per cent of the world’s incremental energy demand growth will come from India.”
Reflecting on the past, he said Indian upstream sector between 2006 and 2016 went through a “dull decade” marred by policy paralysis and procedural delays, leading to the exit of global energy giants like BG, ENI, and Santos. “We were determined to unlock India’s untapped energy potential, estimated at approximately 42 billion tonnes of oil and oil equivalent of gas,” he added.
The Minister’s confidence stems from the reforms introduced by the government — the amended Oilfields (Regulation and Development) Act, 1948 (ORDA), which came into effect from April 15. Terming it as a “landmark reform”, he had said that it modernises India’s upstream regulatory framework and aligns it with international best practices.
Seeking feedback
In a move towards inclusive governance and legal clarity, the Minister also launched the draft PNG Rules Public Consultation Portal, encouraging industry and public stakeholders to share feedback. These rules will help shape future Model Revenue Sharing Contracts and streamline sectoral regulations, he had said.
While rules are needed for the implementation of new laws and amendments, rules for their execution must also be clearly defined.
The draft Rules Portal is to facilitate the same for ORDA amendments.
Some of the key elements that were part of the ORDA amendments include — change in mineral oil definition, replacement of mining lease with petroleum lease, further clarity on data sharing, huge financial penalty for, and not imprisonment, for Violation of Act/Rules among others.
The draft rules stipulate the norms that will ensure no hindrance in mineral oil operation. It also clearly defines the terms for petroleum lease and explains in detail how how migration issues remain to be the bone of contention between two key players Reliance Industries and ONGC.
The draft rules also talk about conditions under which a lease can be cancelled and extension of rights under existing contract, lease or license to conduct all mineral oil operations. It also talks about central repository and aggregation of data.
While many nuances have been picked up from the existing production sharing contracts (PSCs), there’s nothing much in the draft rules about the role of Directorate General of Hydrocarbons. Does this mean “downsizing” or will everything be centralised under Ministry for Petroleum & Natural Gas, critics question.
Also are the draft rules substituting the contractual framework, as there is too much detailing and takes away the flexibility in administering the contracts. Lastly, these proposals in the draft rules give an opportunity to the government to remove some of the open provisions such as terms of extension in leases on same terms. It still leaves it open for the government to negotiate changes. So is the government moving back to having a traditional framework? Not really, because the draft rules proposals do address some of the existing pain points such as migration and data sharing.
Govt initiatives
But policy consistency has been the hallmark. . Minister of State in Ministry of Petroleum and Natural Gas Suresh Gopi had informed Rajya Sabha on March 24 about the various steps the government has been taking to boost domestic oil and gas production, which include:
(i) Policy under PSC regime for early monetization of hydrocarbon discoveries, 2014.
(ii) Discovered Small Field Policy, 2015.
(iii) Hydrocarbon Exploration and Licensing Policy (HELP), 2016.
(iv) Policy for Extension of PSCs, 2016 and 2017.
(v) Policy for early monetization of Coal Bed Methane, 2017.
(vi) Setting up of National Data Repository, 2017.
(vii) Appraisal of Un-appraised areas in Sedimentary Basins under National Seismic Programme, 2017.
(viii) Policy framework for extension of PSCs for Discovered Fields and Exploration Blocks under Pre-New Exploration Licensing Policy (Pre-NELP), 2016 and 2017.
(ix) Policy to Promote and Incentivize Enhanced Recovery Methods for Oil and Gas, 2018.
(x) Policy Framework for exploration and exploitation of Unconventional Hydrocarbons under Existing Production Sharing Contracts (PSCs), Coal Bed Methane (CBM) Contracts and Nomination Fields, 2018.
(xi) Natural Gas Marketing Reforms, 2020.
(xii) Lower Royalty Rates, Zero Revenue Share (till Windfall Gain) and no drilling commitment in Phase-I in OALP Blocks under Category II and III basins to attract bidders.
(xiii) Release of about 1 million sq. km. (SKM) ‘No-Go’ area in offshore which were blocked for exploration for decades.
(xiv) Government is also spending about ₹7,500 crore for acquisition of seismic data in onland and offshore areas and drilling of stratigraphic wells to make quality data of Indian Sedimentary Basins available to bidders.
Clearly, consistently policy structure has been refined, but the problem again lies in execution, which is a legacy issue. The challenge for Puri and his team will be to ensure smooth implementation of the reforms.