1. Nagaland Petroleum & Natural Gas Regulations, 2012

8/13/2019 1. Nagaland Petroleum & Natural Gas Regulations, 2012

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THE NAGALAND PETROLEUM AND NATURAL GAS REGULATIONS2012

AS APPROVED BY THE CABINET SUB-COMMITTEE ON PETROLEUM AND

NATURAL GAS ON 12.09.2012

AS APPROVED BY THE CABINET ON 13.09.2012

AS PASSED BY THE NAGALAND LEGISLATIVE ASSEMBLY ON 22.09.2012

WHEREAS the Nagaland Legislative Assembly, in exercise ofits powers under article 371-A (1) (a) of the Constitution of India,had unanimously passed a Resolution on the 26 th July, 2010rendering inter alia all Acts of Parliament governing petroleum andnatural gas inapplicable to the State of Nagaland:

WHEREAS the Union of India, while replying in Lok Sabha to aquestion raised on the issue on the 10 th March, 2011, declared thatthe State of Nagaland has the power to frame rules for governingmatters relating to petroleum and natural gas within the territory ofNagaland:

NOW THEREFORE, in continuation of the legislativeaffirmation as contained in the Resolution dated the 26 th July, 2010and in exercise of its sovereign Constitutional powers conferredupon it by the special provisions in article 371-A (1) (a) of theConstitution of India, the Nagaland Legislative Assembly herebyresolves to re-state the customary practices of Nagas in regard toownership of land and its resources particularly in relation t opetroleum and natural gas within the territory of Nagaland byenacting the following Regulations:

Short title, extent and comm encem ent:

1. (1) These Regulations shall be called the Nagaland Petroleumand Natural Gas Regulations, 2012.

(2) These shall extend to the whole of Nagaland.(3) These shall come into force with immediate effect and shallbe published in the Official Gazette of the State.


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Definitions Interpretation:

2. (1) The word company would mean all businessorganizations which are legally authorized to operate withinthe territory of India;(2) Other words used in these Regulations have the same legalconnotation as assigned to them in any other law; and(3) In the case of any ambiguity, the interpretation of the StateGovernment shall be final.

Restateme nt of effects of Assembly Resolution dated 26.7.2010

3. With the adoption of the Resolution of the Nagaland LegislativeAssembly on the 26 th July, 2010 under article 371-A (1) (a) of theConstitution of India, -

(1) No Act of Parliament governing Petroleum and Natural Gasshall be applicable to the State of Nagaland and all suchActs shall be deemed to have become inapplicable to theState from the date of enactment of article 371 A (1) (a) ofthe Constitution of India regardless of previous acts ofcommissions and omissions;

(2) No Act or Rule or any other instrument of the Government ofNagaland which is in conflict with the customary lawposition as enshrined in article 371-A (1) (a) of theConstitution of India in regard to land and its ownership inrelation to petroleum and natural gas within the territory ofNagaland shall be deemed to have become void since thedate of enactment of such Act or Rule or any otherinstrument notwithstanding their presence in the statutebook and regardless of previous acts of commissions andomissions; and

(3) Only these Regulations framed by the Nagaland LegislativeAssembly in exercise of its extraordinary legislative powersunder article 371 A (1) (a) of the Constitution of India andany other Rules that may be framed by the Government ofNagaland in accordance with the provisions of theseRegulations, shall apply to matters relating to petroleumand natural gas within the territory of Nagaland.


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Owners of Petroleum and Natural Gas:

4. (1) Whoever owns the land beneath which petroleum andnatural gas resources lie, shall be the owners of such petroleum andnatural gas resources, in whatever form these may lie underneaththeir land; and

(2) Owners of such land and resources may be, -(i) Individual land owners who own oil or gas wells and/or

lands in a zone;(ii) Village Bodies that own wells and/or lands in a zone; and(iii) The State Government that own wells and/or lands in a

zone.

(3)An individual owner of oil or gas well and/or lands in a zoneshall be certified to be so, by the village council concerned.

Inalienability of land:

5. No owner of land or oil or gas well in Nagaland, whether anindividual or a village body or the State Government, shall alienateland or such well in favour of a non-Naga or a company but may giveconsent to a non-Naga or a company to access land or oil or gas well

for pre-production, production and post-production operations in a

zone, which shall revert to the owner at the end of operations.

Petroleum and Gas zones

6. (1) The State Government shall earmark the boundaries of oiland gas bearing areas in the State into petroleum and natural gaszones, as far as possible District-wise, classify them into pre-production, production and post-production zones and name themappropriately as per procedure to be specified in Rules.

(2)A list of such petroleum and natural gas zones shall bepublished in the Official Gazette of the State.

(3)The State Government shall have powers to redraw theboundaries of zones, as and when it is found necessary, so that eachzone is exclusively for one kind of operations.


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(4)A production zone shall not mean only oil or gas wells butshall include other adjacent and en route lands essentially required

for production operations.

Classification o f Op erations:

7. All operations relating to petroleum or natural gas or both inevery zone shall be categorized into the following:

(i) Pre-production operations which mean and include alloperations like exploration, surveys, prospecting, trialproduction etc., prior to the extraction of the firstquantity of oil or natural gas, as the case may be, fromthe well for commercial purposes;

(ii) Production operations which mean and includeextraction of oil or natural gas, as the case may be, fromthe well for commercial purposes; and

(iii) Post-production operations which mean and includecommencement of transporting of the oil or gasextracted from the well for purposes ofconverting/processing oil/gas within Nagaland intomarketable products and by-products.

Selection of Companies:

8. (1)The State Government shall, as soon as may be after thenotification of the petroleum and natural gas zones, commence theprocess of awarding the zones to suitable companies.

(2) The detailed criteria and procedure for award of the zonesto companies shall be as specified in the Rules.

(3)A zone shall be awarded to a company on as is where isbasis.

Award of zone by Permits:

9. (1) Award of a zone for any category of operation to a companyshall be by a permit issued by the State Government which shall bevalid for an initial period of ten years from the date of issue of thepermit, which may be renewed every ten years.


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(2) Any such permit issued to a company in respect of a zoneshall state whether the permit is for pre-production operations or forproduction operations or for post-production operations andseparate permits shall be required for each of these threeoperations.

(3)A permit which ceased to operate under these Rules may be freshly issued to the same company after payment of necessary fresh permit fees.

(4)Renewal of a permit to a company shall be generallyallowed if the renewal fees are paid by the company.

(5) Only a company which has the permit for pre-production ina zone under these Regulations shall be entitled to a permit for

production and post-production operations in that zone, unless thecompany itself is not interested in pursuing further operations in thatzone.

(6) Where a zone is ready for production operations and nopre-production operations are carried out under these Regulations,only a company which has the permit for production under theseRegulations in that zone shall be entitled to a permit for post-production operations, unless the company itself is not interested inpursuing further operations in that zone.

Conditions relating to permits :

10. (1) A company shall commence work in the respective zonewithin one year of issue of the permit, failing which the permit shallautomatically cease to operate and the permit thereof shall not beawarded to the errant company but to a new company.

(2) A company shall not cool off work after commencement ofwork in a zone for a continuous period of six months, and if such a

cool off happens, the permit shall automatically cease to operatewhich shall not be awarded to the errant company but to a newcompany.

(3) The permit of a company shall be permanently invalidated ifthe company is found to have violated any provision of theseRegulations or the Rules framed by the State Government, in whichcase the licence shall not be issued to the errant company again.


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(4) No permit issued to a company shall be transferred to

another company either by the company or by the StateGovernment.

(5) Works in a zone may be sub-contracted by a permit-holdingcompany to another company provided that the value of works sosub-contracted does not exceed twenty five per cent of the networth of the permit-holding company.

Explanation : Sub-clauses (1) and 2) shall not operate in casethe delay in commencing work or the cool-off is caused by forcemajeure reasons.

Permit fees:

11. (1) A company shall deposit with the State Government a feeas specified in the Rules for each of the following, which is non-refundable:

(1) For a new permit for pre-production operations orproduction operations or post-production operations in azone;

(2) For fresh issue of a permit which ceased to operate underthese Rules; and

(3) For renewal of a valid permit every Ten years.

(2) Separate fees shall be charged for separate zones even ifthe company is the same for more than one zone.

General Advisory on Companies:

12. Besides the criteria to be specified in the Rules, the followinggeneral considerations shall be carefully kept in view by the StateGovernment while issuing a permit to a company:

(a) The overall technical expertise, the investment potential,the broad experience in exploration, prospecting andproduction of petroleum and natural gas of the company;

(b) The Plan of the company in regard to corporate socialresponsibility especially for providing a sustainableincome generating ambience to the people of the area


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concerned and for promoting health, educational andinfrastructural development;

(c) The utmost care the company takes in environmentprotection issues;

(d) The trust the company enjoys in the eyes especially ofthe land owners;(e) The companys ability to set up refineries, other ancillary

industries and in utilizing gas;(f) The Company should have trust in Nagas, their culture,

customs and way of life;(g) The overall profile of the Company and antecedents of

the company in the State;(h) The companies other oil and gas related activities in

States with which Nagaland has border disputes;(i) Such other relevant and related considerations affecting

the larger interests of the public inhabiting the zone andthe people of Nagaland, in general.

Land Access Fees for pre-production and post-productionoperations:

13. (1) Besides the permit fees paid to the State Government, forcommencing and continuing pre-production operations or post-

production operations in respect of petroleum or natural gas in azone, a company concerned shall pay to the State Government for further disbursement to the land owners, a land access fee for usingtheir land at such uniform rates as are currently applicable in theState for such land, which shall be restated by the State Governmentin the Rules besides an additional compensation, to be determinedby the State Government to damage caused to crops, property etc.,.

(2)The company shall pay the land access fee annually, onemonth in advance of the beginning of operations in the zone initially,

and thereafter one month in advance of every subsequent year, tothe land owners to be calculated from the date of commencement ofthe pre-production or post-production operations and deposit thesame with the State Government for further disbursement.

(3)No permit for pre-production or post-production operationsshall be issued to a company and no renewal of permit or fresh issueof permit shall be done, without an agreement providing for the


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payment of the land access fees annually in advance to the landowners, being signed between the Government on behalf of the landowners, and the company, with the Tribal Hoho(s) and villagecouncils concerned as witnesses.

(4) Immediately upon the signing of the Agreement in clause(3) above, another Agreement shall be signed between the landowners and the company for handing over the land for access to thecompany for the requisite period, with the Village Councilconcerned as witness.

(5) Delay in payment of land access fees to the land ownersshall attract a monthly interest to be specified in the Rules.

Explanation : The land shall revert back to the owners once the

pre-production or post-production operations are certified to havebeen concluded by the State Government and from the date of suchreversion, the company concerned is not liable to pay land access

fee to the land owners.

Revenu e Share in production of petroleum a nd natural gas:

14. (1) Besides the permit fees paid to the State Government, forcommencing and continuing production of petroleum or natural gasin a zone, the company concerned shall additionally pay to the State

Government not less than sixteen per cent. of total value ofproduction of petroleum or not less than twelve per cent. of value ofproduction of natural gas as ascertainable at the mouth of the oil orgas well, as the case may be, which shall be distributed in the

following manner:

(a) Not less than two per cent both in the case of petroleumand natural gas collectively to the individual land ownerswho own oil or gas wells in a zone;

(b) Not less than four per cent in the case of petroleum or

not less than two per cent in the case of natural gascollectively to other individual land owners who do notown oil or gas wells in a zone;

(c) Not less than two per cent in the case of petroleum andnot less than two per cent in the case of natural gas tothe District Development Board of that zone;


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Refinery, Bottling and Ancillary Industries:

15. No part of crude oil or natural gas extracted from Nagalandshall be transported out of the State without being refined or bottledor converted into marketable products and by-products withinNagaland as part of post-production operations subject to theproduction limits required for setting of such refinery, bottling andancillary industries is reached by the companies.

Naga to be rand Nam e of products and by -products:

16. The company operating under these Rules shall name allpetroleum and natural gas products and by-products by prefixing to

the name of every such product or by-product the Brand NameNAGA, failing which it shall be deemed as violation of theseRegulations by the Company.

Employment:

17. (1) Every company to which a permit is issued in respect of apetroleum or natural gas zone, shall compulsorily reserve not lessthan 50% jobs of unskilled category and 10% of non-technical whitecollar jobs to Naga youths from the respective oil/gas bearing

Districts in all (i) pre-production (ii) production and (iii) post-production operations.

(2)10% of all non-technical white collar jobs and 10% oftechnical jobs shall be reserved for the Naga Youths from all overthe State.

(3)Failure to implement this provision shall be deemed as wilfulcontravention of these Regulations entailing invalidation of permit ofthe company.

Use of Revenues:

18. (1) Subject to the provisions herein the revenues accruing tothe DPDBs and State Government under these Regulations shall becredited to respective Special Corpus Funds to be exclusivelyapplied to overall infrastructure development of the State and theDistrict respectively;


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(2)The quarterly reports of the Deputy Commissioner and the

Annual Reports of the High Powered Committee, referred to inRegulation No. 23, should precisely inform about the quantum ofrevenues received under these regulations and the manner in whichvisibly infrastructure has been improved in the State and Districtlevels.

Naga Petroleum Academy:

19. The State Government shall establish a Training Institution byname Naga Petroleum Academy to train Naga youths in unskilledand skilled jobs, technical and non-technical jobs and other relatedwork in petroleum and natural gas industry.

Single Window:

20. (1) The State Government shall nominate anAgency/Department, whether existing or a newly created one, as theNodal Agency/Department to carry out the purposes of theseRegulations and Rules to be framed by the State Government.

(2) The Agency/Department so nominated shall function asSingle Window for the companies to correspond with in all mattersunder these Regulations and the Rules to be framed.

(3) It shall be the responsibility of the NodalDepartment/Agency to obtain all clearances and carry out allnecessary documentary work on behalf of the companies so that thecompanies are not caught in delays and uncertainties and feel atease in the State.

(3)A permit granted to a company shall be invalidated or maycease to operate only in the contingencies expressly specified inthese Regulations and not on account of deficiency on any ground

including the ground of not having any clearance and it shall be theendeavour of the Nodal Department to assist the Company inremedying any such deficiency if detected after the issue of thepermit.

Explanation : This concession shall not apply to a companywhich contravenes any provision relating to economic


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offences, tax violations, money laundering etc., punishableunder any law operative in the territory of India.

(4)As the operations under these Regulations are conductedwithin the framework of article 371-A(1)(a) of the Constitution ofIndia, only these Regulations and Rules to be framed by the StateGovernment shall apply in regard to clearances for operations by acompany in the State.

Security:

21. (1) Every Company operating under these Regulations on thesoil of Nagaland shall be the Special Guest of the Nagas, and it shallbe the special responsibility of the people of Nagaland in particular,the individual landowners, the Village Councils, the Tribal Hoho(s),

the District Administration and the State Government to protect thelives, liberties and properties of those in the Company and toprovide necessary logistics to the operations of the Company.

(2) The individual land owners, the village councils, theDistrict Administration, the Tribal Hoho(s) concerned and the StateGovernment shall, before the operation is begun by the company ina zone, sign a covenant to the effect that the lives, liberties andproperties of those in the company shall be protected at all costsand shall not be damaged under any provocation.

(3) In line with the covenant, the State Government shallensure adequate security to the equipment, installations, manpowerand other resources of the companies operating in the State in therespective zones.

Companies to comply with customary law:

22. (1) Every company, before being issued with a permit for pre-production or production or post-production operations, shall give

an undertaking to the State Government that it shall bind itself to theNaga customary practices of the respective tribes.

(2)Any such undertaking as referred in clause (1) above shallbe deemed part of the Agreements the company is required to signwith the State Government under these Regulations.

Monitoring Reporting:


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23. (1) The implementation of these Regulations shall becontinuously monitored by a High Powered Committee headed bythe Chief Minister of the State and comprising some Ministers andthe Chief Secretary.

(2) There shall also be a Committee at the District level of thezone(s) concerned with the Deputy Commissioner as the Head andthe President(s) of the Tribal Hoho(s) as members withrepresentatives drawn from the private land owners and villagecouncils.

(3)The District level Committee shall present quarterly reportsto the High Powered Committee which in turn cause Annual Reportsmade and laid before the Nagaland Legislative Assembly.

Power to make Rules:

24. (1) The Nagaland Legislative Assembly hereby delegates itslegislative powers available to it under article 371-A (1)(a) of theConstitution of India in relation to land and its resourcesparticularly in relation to petroleum and natural gas, to theGovernment of Nagaland to make appropriate Rules within thescheme and scope of these Regulations in order to effectively carryout the purposes of these Regulations which shall make provisions, -

(a) for matters required to be specified under theseRegulations; and

(b) to remedy all insufficiencies and inadequacies in theseRegulations that may arise during implementation.

(2)Rules so made by the Government of Nagaland shall takeeffect from the dates specified therein, but shall be laid before theNagaland Legislative Assembly, as soon as may be after these are

made.

(3)The Nagaland Legislative Assembly has powers to annul ormodify any of these Rules.

(4) The Government of Nagaland shall consult the Tribal Hoho(s) while framing rules under this provision.


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Printed for the Department of Geology & Mining, Government ofNagaland by the Member-Secretary, Cabinet Sub-Committee onPetroleum and Natural Gas (APC Cell)

September 2012

1. Nagaland Petroleum & Natural Gas Regulations, 2012

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