1107 | Downstream Oil and gas

Course Information

  • 2021-22
  • 1107
  • 5-Year B.A., LL.B. (Hons.), LL.M.
  • III, IV, V
  • Jul 2021
  • Elective Course

The Indian oil and gas (O&G) sector, mainly, comprises of upstream (exploration and production) and downstream (refining, transportation, pipelines, city gas distribution network, retail outlets, among others). The downstream O&G sector for a long time was dominated by Government controlled Public Sector Undertakings (PSUs). With the liberalization of the Indian economy in 1990’s, GOI allowed 100% FDI in the downstream O&G sector under the automatic route. However, the downstream sector continued to suffer due to indirect control by Government over the PSUs (main players in the market), which made participation from private player not competitive. Since 2002 the Government has gradually removed most of the restrictions imposed on the sector, allowing private participation attractive and commercially viable. To overcome shortage in domestic production of natural gas, Government is also encouraging procurement of imported LNG. Government is also supporting setting up of new LNG terminals for supply of imported gas. Government has enacted Petroleum and Natural Gas Regulatory Board (PNGRB) Act, 2006 to ensure planned development of the downstream infrastructures. Interested parties are allowed to apply to, or PNGRB sou moto, can invite proposals for the development of natural gas pipeline and CGD network.

The downstream sector provides a huge opportunity for lawyers as the sector is still at its nascent stage and lacks qualified legal advisors, with specialization and understanding of the sector. The downstream O&G law includes the vast arena of laws appliable to the downstream infrastructure. For this seminar paper, we will limit our focus to the primary laws applicable to the sector, the Petroleum Act 1934, PNGRB Act 2006, land acquisition laws, and the various rules and regulations made under the above laws. Further, we will look-into some of the contracts governing the downstream sector.

The course is best suited for the fourth and final year students, who have the required knowledge of the Indian Constitution, Contract Law, Transfer of Property and Administrative law.

Course Approach: Downstream O&G sector is a specialized sector with high cost, high risk and long-term investment. Therefore, while teaching the course the focus will be on the interplay between sectorial requirements and the laws. The course will start with the history of the downstream O&G sector in India. This will help the students to appreciate the downstream  legal regime developed over the decades, and the nuances of the sector, some of which are historical in nature.

The course will primarily cover domestic laws covering the sector, and relevant downstream contracts (gas transportation agreement and gas sale agreement). As it is not possible to cover all aspects of the downstream O&G sector, the focus will be on the main legal and the contractual issues, and various risk mitigation measures used in the sector.

Resources: The primary resources will be the legislations, case laws and  various reports. Further, while dealing with contractual issues we will refer to articles, case laws and books from other jurisdictions such as US and UK.

Methodology: The course will involve delivering lectures on basic concepts. The part of the course which deals with constitution and other laws will be conducted by way of discussion, presentation, case analysis and Q&A sessions.