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Time of India
6 days ago
- Business
- Time of India
Oil explorers may get legal shield if assets stripped off
New Delhi: An explorer will be entitled to compensation if the government takes away its assets or contractual rights under an oilfield agreement, according to a draft contract proposed by the oil ministry. The move aims to address international energy companies' long standing demand for protection against expropriation. "If any measure or series of measures taken by the government or the state government substantially or permanently deprives the contractor of the ownership of any assets being utilised for mineral oil operations, or of its rights under the lease or this contract, the contractor shall be entitled to compensation," the draft contract states. The compensation will be equivalent to "all costs and expenditures incurred in respect of mineral oil operations, up to that point relating to such asset or rights deprived," per the draft. However, compensation will not be paid if the company hasn't submitted a field development plan for the specific field, or if the government action was prompted by the need to protect its own rights or legitimate public interests. Energy giant ExxonMobil has for years demanded that exploration contracts provide a legal shield against government moves to expropriate assets. Without using the term 'expropriation', the draft contract attempts to address concerns like those raised by Exxon by including a provision for compensation, an official said. An Exxon India executive previously told ET that its demand for protection against expropriation was "rooted in experience," citing how it faced expropriation after a change in government in Venezuela in the past. The government is reworking the Model Revenue Sharing Contract (MSRC) to attract large foreign oil companies , which have largely stayed away from India's exploration licensing rounds under the Open Acreage Licensing Policy introduced eight years ago. Scarce exploration success and maturing fields have led to falling output and rising dependence on oil and gas imports. Globally, capital allocation for exploration has been shrinking and is being increasingly directed toward regions offering the best returns and stronger investment protection. Lower oil prices are also making it harder for multinationals to commit capital to countries like India, which are not known for abundant petroleum resources.
Time of India
6 days ago
- Business
- Time of India
Oil explorers may get legal shield if assets stripped off
New Delhi: An explorer will be entitled to compensation if the government takes away its assets or contractual rights under an oilfield agreement, according to a draft contract proposed by the oil ministry. The move aims to address international energy companies' long standing demand for protection against expropriation. "If any measure or series of measures taken by the government or the state government substantially or permanently deprives the contractor of the ownership of any assets being utilised for mineral oil operations, or of its rights under the lease or this contract, the contractor shall be entitled to compensation," the draft contract states. Explore courses from Top Institutes in Please select course: Select a Course Category Others Design Thinking Artificial Intelligence MBA Degree Management Finance Data Science CXO MCA Data Analytics Operations Management Leadership Digital Marketing Public Policy healthcare Product Management Cybersecurity Data Science Healthcare others Project Management Technology PGDM Skills you'll gain: Duration: 16 Weeks Indian School of Business CERT-ISB Transforming HR with Analytics & AI India Starts on undefined Get Details Skills you'll gain: Duration: 7 Months S P Jain Institute of Management and Research CERT-SPJIMR Exec Cert Prog in AI for Biz India Starts on undefined Get Details Skills you'll gain: Duration: 9 months IIM Lucknow SEPO - IIML CHRO India Starts on undefined Get Details Skills you'll gain: Duration: 28 Weeks MICA CERT-MICA SBMPR Async India Starts on undefined Get Details The compensation will be equivalent to "all costs and expenditures incurred in respect of mineral oil operations, up to that point relating to such asset or rights deprived," per the draft. However, compensation will not be paid if the company hasn't submitted a field development plan for the specific field, or if the government action was prompted by the need to protect its own rights or legitimate public interests. Energy giant ExxonMobil has for years demanded that exploration contracts provide a legal shield against government moves to expropriate assets. Without using the term 'expropriation', the draft contract attempts to address concerns like those raised by Exxon by including a provision for compensation, an official said. An Exxon India executive previously told ET that its demand for protection against expropriation was "rooted in experience," citing how it faced expropriation after a change in government in Venezuela in the past. The government is reworking the Model Revenue Sharing Contract (MSRC) to attract large foreign oil companies , which have largely stayed away from India's exploration licensing rounds under the Open Acreage Licensing Policy introduced eight years ago. Scarce exploration success and maturing fields have led to falling output and rising dependence on oil and gas imports. Globally, capital allocation for exploration has been shrinking and is being increasingly directed toward regions offering the best returns and stronger investment protection. Lower oil prices are also making it harder for multinationals to commit capital to countries like India, which are not known for abundant petroleum resources.
India Gazette
09-07-2025
- Business
- India Gazette
Draft PNG Rules introduced aimed at modernising India's upstream oil-gas framework
New Delhi [India], July 9 (ANI): The Ministry of Petroleum and Natural Gas has introduced the Draft Petroleum and Natural Gas Rules, 2025, aimed at significantly enhancing the ease of doing business of the exploration and production (E&P) operators. The Minister urged all stakeholders, industry leaders, experts, and citizens to share their feedback on the Draft, the revised Model Revenue Sharing Contract (MRSC) and the updated Petroleum Lease format by July 17, 2025, at [email protected]. The consultation process will culminate at Urja Varta 2025, scheduled to take place at Bharat Mandapam, New Delhi, on July 17. The Draft Petroleum and Natural Gas Rules, 2025, aim to modernise India's upstream oil and gas framework with several major reforms. Key among them is the introduction of an investor-friendly stabilisation clause, designed to protect lessees from the adverse impacts of future legal or fiscal changes, such as increases in taxes, royalties, or other levies, by allowing for compensation or deductions. To reduce infrastructure duplication and encourage smaller players, the draft mandates that lessees declare under-utilised capacity in pipelines and other facilities, and provide third-party access on fair terms, subject to government oversight. For the first time, the draft rules permit operators to undertake integrated renewable and low-carbon projects, including solar, wind, hydrogen, and geothermal energy--within oilfield blocks, provided they meet safety standards and do not interfere with petroleum production. Strengthening environmental stewardship, the draft introduces detailed requirements for monitoring and reporting greenhouse gas emissions, establishes a regulatory framework for carbon capture and storage (CCS), and mandates site restoration funds with post-closure monitoring for a minimum of five years. In terms of data governance, all operational data and physical samples generated during exploration and production will belong to the Government of India. Lessees can use this data internally, but any export or external use requires government approval, with confidentiality protections lasting up to seven years. The draft rules also propose the creation of a dedicated Adjudicating Authority, not below the rank of Joint Secretary, empowered to enforce compliance, resolve disputes, and impose penalties. Additional provisions include clearer processes for lease mergers, extensions, and unitisation of reservoirs spanning multiple blocks, aimed at improving operational flexibility. These reforms replace the outdated Petroleum Concession Rules, 1949 and Petroleum and Natural Gas Rules, 1959, and follow the recent amendment of the Oilfields (Regulation and Development) Act, 1948. They are also timed to precede OALP Round X, India's largest-ever exploration and production bidding round. Alongside the draft rules, the Ministry has released a revised Model Revenue Sharing Contract that aligns with the new framework, particularly regarding unitisation, merged lease areas, and infrastructure sharing obligations. The revised Petroleum Lease format clarifies processes on lease relinquishment, reservoir extension and cancellation triggers, thereby providing greater operational certainty. Hardeep Singh Puri emphasised, 'It has never been easier, faster and more profitable to explore oil and gas in India. We look forward to constructive engagement to shape a modern, investor-friendly regime.' (ANI)
