Page 154 - CW E-Magazine (20-5-2025)

Hydrocarbons

DRAFT REGULATION
Government mulls pre-emption right over oil, gas in

national emergency

The Government will hold pre-emp- products produced from the crude oil
tion rights over all oil and natural gas or natural gas extracted from the leased
produced in the country in any event of area, or of the crude oil or natural gas
national emergency, according to draft where the lessee is permitted to sell,
rules being framed under a revamped export or dispose of without it being
oilfi elds legislation. refi ned within India,” the rules stated.

A pre-emption right (or pre-emptive This right will be exercised by pro-
right) is the legal right of a party – often viding a “fair market price prevailing
a government or existing shareholder – at the time of pre-emption to the lessee by
to purchase or claim a product, asset, or The Ministry of Petroleum and Natu- Government of India, for the petroleum
resource before it is off ered to others. The ral Gas has invited comments on draft or petroleum or mineral oil products
inclusion of such rights over crude oil – rules after Parliament earlier this year or the crude oil or natural gas taken in
extracted from underground or beneath passed the Oilfi elds (Regulation and pre-emption.”
the seabed and refi ned into fuels like Development) Amendment Bill which
petrol and diesel – as well as natural gas, replaced outdated provisions from the The rules, however, did not defi ne
which is used for power generation, ferti- 1948 Act, to boost domestic produc- what would constitute a national emer-
liser production, CNG for vehicles, and tion, attract investment, and support the gency. “Government of India shall be
piped cooking gas, is intended to help the country’s energy transition goals. “In the the sole judge as to what constitutes a
government prioritise national interests case of a national emergency in respect national emergency in respect of mineral
and ensure public welfare during emer- of petroleum products or mineral oil, oils, and its decision in this respect shall
gencies. The producer of oil and natural Government of India shall, at all times, be fi nal,” the rules said. The draft rules
gas will be paid a “fair market price during such emergency, have the right of also provide for oil and gas operators
prevailing at the time of pre-emption”, the pre-emption of the mineral oils, refi ned being exempt from their obligations under
draft rules said. petroleum or petroleum or mineral oil the Act in force majeure conditions.
IMPORT BILL RELIEF
India could save Rs. 1.8-lakh crore on softening

global crude oil prices

India is likely to save as much as Oil prices in international markets prices were cut by Rs. 2 per litre each
Rs. 1.8-lakh crore on import of crude oil fell to over four-year low of $60.23 per ahead of general elections. “ICRA expects
and LNG if the trend of softening inter- barrel recently on fears of rising global average crude prices for FY2026 (April
national energy rates continues, according supply at a time when demand outlook 2025 to March 2026 fi scal year) to remain
to an analysis by ratings agency, ICRA. is uncertain. in the $60-70 per barrel range,” the rating
agency said in a note.
India, which meets over 85 percent of Brent crude and US West Texas Inter-
its crude oil needs through imports, spent mediate crude, which fell to their lowest At these levels, earnings of upstream
$242.4-bn on buying crude from over- since February 2021, have since risen to companies are estimated at Rs. 25,000-
seas in the fi scal year ended March 31, $62.4 on signs of more Europe and China crore for FY2026.
2025. With domestic production meeting demand and less US output.
roughly half of the demand, it also spent “However, there would be savings of
$15.2-bn on import of liquefi ed natural Still the rates are $20 per barrel lower Rs. 1.8-lakh crore for crude imports and
gas (LNG) in the fi scal. than March 2024 when petrol and diesel Rs. 6,000-crore for LNG imports,” it said.

154 Chemical Weekly May 20, 2025

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