RAJKUMAR UNIVERSITY OF PETROLEUM & ENERGY STUDIES

"Let me tell you something that we Israelis have against Moses. He took us 40 years through the desert in order to bring us to the one spot in the Middle East that has no oil!" -Golda Meir (Israeli founder and prime minister ) 2

CLASSIFICATION OF INDUSTRIES Upstream Exploration & Production of oil and Gas Downstream Refining Processing Storage Distribution Midstream Transportation and LNG Terminals

Upstream Upstream activity involves exploration and production All the stages from exploration to production comes under upstream activity The discovery of the vast Bombay High field in 1974 in the west coast offshore was the most significant event in India’s upstream sector.

Downstream Refining Storage Processing Transportation Distribution etc… Note: Downstream does not include exploration and production of crude oil and natural gas

Upstream sector Foreign companies have entered the Indian E & P scene since the early fifties through joint venture with the government of India. But after New exploration licensing policy (NELP) the participation of foreign companies is allowed to 100% in upstream sector. In the past only NOC’s are in upstream sector

Downstream sector Private players are allowed across the downstream sector

WHO OWNS THE NATURAL RESOURCES Government-Owner of the natural resources So companies which want to invest in our resources have to play by the laws enacted by the government in this regard.

CONSTITUTION OF INDIA Who can enact laws on the subject of Oil and Gas? Constitution of India demarcates legislative competence of state and central under seventh schedule

JURISDICTION OVER OIL AND NATURAL GAS RESOURCES Article 247 CoI:7 th Schedule: Entry 53 of Union List I “Regulation and development of oilfields and mineral oil resources; petroleum and petroleum products” CoI: 7 th Schedule: Entry 25 of State List II “Gas and Gas Works” Presidential reference, Supreme Court Opinion(Article 143(1) of COI) Natural gas- a petroleum product and hence, a central subject

Supreme Court The apex court had to sit in judgment after the Gujarat government passed Gujarat Gas (Regulation of Transmission, Supply and Distribution) Act, 2001 The object of the Act was to regulate transmission, supply and distribution of gas in the interests of general public and to promote gas industry in the state and to establish Gujarat Gas Regulatory Authority

Supreme Court Supreme court held natural gas, including LNG, is a Union Subject and only the Centre has the exclusive legislative competence to enact laws, states have no legislative competence to make laws on natural gas and LNG and Gujarat Gas Act, 2001 is ultra vires the Constitution. So Jurisdiction to regulate gas clearly identified with Centre by the judgment

Supreme Court Justice K.G. Balakrishnan, writing the judgment, noted: ‘‘The regulation of oil fields and mineral oil resources necessarily encompasses the regulation as well as development of natural gas.’’