RAJKUMAR UNIVERSITY OF PETROLEUM & ENERGY STUDIES

CLASSIFICATION OF INDUSTRIES
Upstream Exploration & Production of oil and Gas

Downstream Midstream Transportation and LNG Terminals Refining Processing

Storage
Distribution

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 Indias 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 in the past through joint venture with the NOCs But after New exploration licensing policy (NELP) the participation of foreign companies is allowed to 100% in upstream sector. In the past only NOCs 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 legislative and contractual framework in place.

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 246 CoI:7th Schedule: Entry 53 of Union List I Regulation and development of oilfields and

mineral oil resources; petroleum and petroleum products; other liquids and substances declared by parliament by law to be dangerously inflammable CoI: 7th Schedule: Entry 25 of State List II Gas and Gas Works

Gujarat act 2001

The state legislature of Gujarat passed an act Gujarat

Gas (Regulation of Transmission, Supply and Distribution) Act 2001 by tracing its legislative competence under entry 25 of list II. When the state of Gujarat passed the Gujarat Act, the question arose whether the state Government can pass an enactment in respect of Gas, including natural gas in all its forms under entry 25 of list II of the seventh schedule.

Object
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

Gujarat act 2001

So the question arose whether natural gas is a union

subject or state subject and whether the state of Gujarat and the other states have the legislative competence to make laws on the subject of Natural Gas

Presidential reference
Presidential reference, Supreme Court

Opinion(Article 143(1) of COI)

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

Questions ref to court

Whether natural gas is a union subject covered by

entry 53 Whether states have legislative competence to make laws on the subject of natural gas including LNG Whether the state of Gujarat had legislative competence to enact Gujarat Gas Act 2001

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.