GS PAPER III: Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.

Context: The Petroleum Ministry has proposed amendments to existing law to include cleaner sources of energy like hydrogen within the definition of 'mineral oils' for which the government gives out licence to explore and produce.

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.

https://www.thehindu.com/business/Industry/centre-proposes-changes-in-law-to-include-hydrogen-in-mineral-oil/article34840413.ece?homepage=true

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