India's Energy Reforms: Unlocking Potential with New Amendments

India expands its exploration policy beyond traditional fuels, abolishing windfall tax, attracting private and foreign investments. Recent legislative efforts aim to modernize the Oil Fields Act, including shale resources and improved lease terms. These changes target an investor-friendly environment and a shift towards greater energy self-sufficiency.

In a significant policy shift, India has broadened its exploration policy to encompass more than just petroleum and natural gas. The move is complemented by the recent abolition of a windfall tax on domestically produced crude oil, steps expected to attract private and foreign investments into the country's upstream energy sector, as per S&P Global Commodity Insights.

Last week, the Indian upper house of parliament, the Rajya Sabha, passed a Bill amending the Oil Fields (Regulation and Development) Act of 1948. The amendment seeks to include shale oil, shale gas, and coal bed methane within its ambit, alongside traditional oil and gas. Proposed changes also extend to allowing international arbitration and offering longer lease periods.

The bill now awaits passage in the Lok Sabha. If enacted, it will allow the central government to establish comprehensive rules regarding leases, conservation, and oil production, significantly impacting how royalties and taxes are collected. This legislative overhaul is part of a broader strategy to foster an investor-friendly environment, improving global competitiveness as recounted by Rahul Chauhan of S&P Global.

(With inputs from agencies.)