Centre releases draft bill to bring hydrogen under oilfields act

Centre releases draft bill to bring hydrogen under oilfields act

Subject : Legislations

Context : The Centre plans to bring hydrogen generated from crude oil under the ambit of the Oilfields (Regulation & Development) Act, 1948.

Concept :

Oilfields (Regulation & Development) Act, 1948

• It deals with ‘mineral oils’ as understood in the conventional sense.
• In order to facilitate the development and production of alternative/derivative clean energy sources that may be developed in future, the amendment bill seeks to redefine ‘mineral oil’.

Oilfields (Regulation and Development) Amendment Bill 2021

• It proposes to amend the present act to “create opportunities for exploration, development and production of next-generation cleaner fuels and mitigate regulatory challenges and risks.”
• It also proposes a new definition of ‘mineral oils’ by including within its ambit modern and cleaner sources of energy like hydrogen.
• It also seeks to foster investment in the exploration and production of oil and gas by offering a lease on stable terms and enabling the government to prescribe a compensation mechanism to protect the investment.
• Conventionally, mineral oil is understood to mean hydrocarbons in various forms including natural gas and petroleum oil.
• Hydrogen gas is a clean source of energy, which can be produced, distributed and regulated in conjunction with natural gas.
• The compensation shall be payable in case of suspension, revocation or cancellation of the lease or in case of restriction of access to the leased area.
• It also seeks to explicitly enumerate the power of the government to prescribe rules for the extension of the period of the lease, the maximum or minimum area of the lease, a mechanism for determination of the economic life of the oilfield, terms for merger or combination of leases and resolution of disputes.
• It provides for the imposition of fines of up to ₹1 crore for the first contravention of provisions of any rules. Subsequent contraventions will attract a fine of up to ₹10 lakh per da
• It seeks to empower the government to recover royalty, cess, lease or licence fee, penalty payment under the law, the draft said.