Bulletin Updates

E&P regime: Government brings about dramatic changes – 23 Apr 2025

Apr 23, 2025

Lessees to forfeit entire production value if caught drilling beyond lease borders 8State and Centre can jointly cancel leases—surface, subsurface, or shared 8Merged leases offer scale economies but come with full legacy liabilities 8No lease without a Rs 25 lakh deposit and a Rs 2.5 lakh non-refundable application fee 8Lessees must declare true area use annually—false data invites penalty and recovery 8Field development plans are no longer optional—strict timelines now enforced 8Gas flaring under the scanner: Calibrated meters and quarterly emission reports made mandatory 8Sequestration rights split into short-term injection and long-term storage permits 8Lessee must ensure five-year post-closure surveillance of GHG storage fields 8Government gains full right to access, audit and share operator-submitted field data 8No operations allowed near airports, mines or defence sites without express central nod 8Offshore operations can now be anchored from onshore—subject to dual approval 8Surface rights delinked from lease termination—lessee must manage separate land lease 8Old licenses can’t evade new obligations—environment, safety and data clauses will still apply 8Relinquishment of blocks comes with precise timelines—and automatic deeming clauses 8Relinquish late, and entire lease can be deemed void—even without notice 8Security deposit can be seized to fund cleanup if restoration is skipped 8Production from reservoirs that stretch beyond lease limits now mandates unitization 8Government reserves full pre-emption rights during any national energy emergency 8Lease rent escalates steeply year on year—from Rs 200/km² to Rs 4000/km² over five years 8Lessees must allow access to adjacent block holders—fair compensation clause kicks in 8Contract terms can’t be worsened mid-term—stabilization clause offers shield from hostile policy 8All data, even proprietary, reverts to government control after five years unless justified 8Shared infrastructure can be declared "common" even against owner’s will 8No drilling suspension without prior notice—24-hour rule for emergency shutdowns 8Centre gets final say in lease cancellation—even if granted by states 8Post-termination, assets must be transferred in “good working condition” 8Government can claw back costs from site restoration fund—plus interest and penalties 8Lessees who don’t surrender areas on time may be assumed to have exited completely 8Offshore-onshore integration now formalized—expands frontier exploration flexibility 8Fines, dues, and lease penalties now recoverable as land revenue under revenue law 8Field performance to dictate lease renewal—past delays and payment lapses under scrutiny 8Central repository to control and monetize oilfield data—paid access regime on the cards 8No licensee can transfer lease rights without Centre’s written consent 8New rules override only where older lease terms are less beneficial

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