While India’s own leaps into clean energy and sustainability come with some significant policy reforms in the oil and gas sector, aimed at boosting domestic exploration and reducing import dependency, it has also introduced a very significant yet popular reform in the oil and gas sector.
Recently passed the Oilfield (Regulatory and Development) Amendment Bill, 2024, encouraging investment and improving exploration and production capacity. The bill has been passed into law by the Lok Sabha. It is a provision that amends the Oilfields (Regulation and Development) Act of 1948, giving serious emphasis on regulatory streamlining for investment enhancement and production augmentation. Rajya Sabha approved it in December 2023.
Key Amendment Highlights
As a result, the new law must be switching India from a licence-type regime to an investment-driven model—facilitative for business—about domestic oil production.
- Increased Lease Period and Security
- Decriminalisation of defaults with increased penalties
- Infrastructure sharing provisions to enhance performance among lessees.
Hardeep Singh Puri, Minister for Petroleum and Natural Gas, cited the bill’s importance in bringing India’s energy sector closer to international best practices. “This is the most dramatically changed global energy scenario. The amendment reflects these realities and, indeed, our own national priorities,” he added.
Managing Hydrocarbons alongside Renewables
Directly, India has set aside huge investments in solar and wind energy, EVs, green hydrogen, and biofuels, but petroleum is going to remain a major component of the energy basket in the country, according to Puri.
“We are going to rely on conventional energy for some time. We need to step up our exploration and production activities,” he said.
India consumes about 5.5 million barrels of crude oil in a day, which is supposed to increase to 6.5-7 million barrels per day in coming years. Currently, 220 million tonnes of crude oil are imported annually, amounting to $108 billion. It makes India highly vulnerable concerning supply disruptions and price volatility.
Investor Interest and Market Dynamics
Investor interest in the oil and gas industry swung back and forth because of uncertainty on energy transition policy. To keep encouraging more and more private and foreign investment in sector development, the government introduced a steady legal framework and better dispute resolution mechanisms in the process.
“We have now opened this up to encourage domestic crude production: earlier, one million sq km of our sedimentary basin was a ‘No Go’ area, increasing import dependence,” Puri said.
Investor confidence is likely to be rejuvenated by this move since India is acknowledged by the International Energy Agency (IEA) to be the largest contributor to the global demand growth in oil during the second part of the decade.
India’s Growing Oil Demand
India will consume more oil than any other country except China during 2023-2030, with demand spurred by the rapid expansion in the transportation sector. Among the reasons for this increase in demand are:
- The growing number of vehicles: India has overtaken Japan as the third-largest passenger vehicle market.
- Massive increase in road transport: Road transportation has grown tremendously, with the number of cars multiplying eightfold since 2000, with more to come down this path.
- Rising diesel and gasoline consumption: Unlike other parts of the world where oil demand has been tapering off due to the increased thermal and use of electricity for EVs, India continues to have tremendous increases in diesel and gasoline consumption.
Energy Transition Strategy: A Slow Shift in Energy Transition
Globally, the energy transition has picked up speed. India adopted a strategic transition, keeping in place fossil fuel contributions to the economy while slowly releasing renewable energy.
The government has initiated several programmes that will create battery-operated and hydrogen-fuelled vehicles as well as the mandate to blend ethanol and compressed biogas to satisfy some oil consumption.
“Energy transition is about strategically using existing fossil fuels while expanding renewable sources—not immediately phasing out hydrocarbons,” Puri said.
Conclusion
India opened up oil exploration norms at a time when its long-term clean energy goals were conflated with its immediate need for energy security. This very policy approach, buoyed by investment incentives and expanding infrastructure, is geared towards meeting future energy needs while de-fossilising them gradually.
The success of these reforms will solely depend on how well India integrates new opportunities for area-based oil exploration with sustainability efforts, such that a smooth and resilient energy transition will be guaranteed.
Source: PIB
