Section 28 in The Offshore Areas Mineral Concession Rules, 2006
28. Conditions of a production lease.
(1)Every production lease shall be subject to the following conditions, namely:-(a)the lessee shall report to the administering authority the discovery in the offshore leased area of any mineral not specified in the lease, within sixty days of such discovery:Provided that indications of any form of mineral oil namely, oil, gas, gas hydrate. oil sands or any other hydrocarbon, if encountered during production operation shall be reported to the administering authority within a period of sixty days from the day of such encounter, who in turn shall pass on the information to the Ministry of Petroleum and Natural Gas;(b)if any mineral not specified in the lease is discovered in the offshore leased area, the lessee shall not win and dispose of such mineral unless such mineral is included in the lease or a separate lease is obtained there or;(c)the lessee shall pay, for every year, such yearly fixed rent at the rates specified in the Second Schedule to the Act and if the lease permits the working of more than one mineral in the same area the administering authority shall not charge separate fixed rent in respect of each mineral:Provided that the lessee shall be liable to pay the fixed rent or royalty in respect of each mineral, whichever be higher in amount but not both;(d)the lessee shall commence production operations within two years from the date of execution of the lease and shall thereafter conduct such operations in a proper, skillful and workman-and workman-like manner;(e)the lessee shall keep accurate and true accounts showing the quantity and other particulars of all minerals obtained and despatched from the mine, the number and nationality of persons employed therein, and complete plans of the mine, and shall allow any officer authorised by the Central Government or administering authority in this behalf to examine at any time any accounts, plans and records maintained by him and shall, furnish the administering authority with such information and returns as it or any officer authorised by it in this behalf may require;(f)the lessee shall keep accurate records of all excavations, pits ands made by him in the course of production operations carried on by him under the lease, and shall allow any officer authorised by the Central Government or administering authority to inspect the same. Such records shall contain the following particulars, namely:(i)the subsoil and strata below the seabed through which such excavations, pits or drillings pass;(ii)any mineral encountered;(iii)such other particulars as the Central Government or administering authority may from time to time, require;(g)the lessee shall allow any officer authorised by the Central Government or administering authority, as the case may be, to enter upon any site of excavation or any portion of lease area comprised in the lease for the purse of inspecting the same;(h)the lessee shall not pay a wage less than the minimum wage prescribed by the appropriate Government from time to time under the Minimum Wages Act, 1948 (11 of 1948);(i)the lessee shall comply with the directions issued by Central Government or administering authority for conservation and systematic development of Offshore minerals, prevention of pollution, protection of marine environment and prevention of coastal erosion or prevention of danger of life and property including marine life;(j)the lessee shall conduct all production operations himself. In case equipment or machinery for production operations are deployed by way of contract, only Indian companies should be preferred and if foreign companies are engaged, the work should be carried out under the supervision of Indian representatives of the lessee who shall ensure appropriate security safeguards;(k)the lessee shall ensure that data generated during the production operation should be processed in India and such processed and unprocessed data may be imparted to any foreign contractors only with prior approval of the Central Government.(l)the lessee shall ensure that all vessels deployed in the area by the lessee or by the contracted companies shall undergo Naval Security Inspection under the aegis of the Flag Officer Commanding-in-Chief of the concerned Naval Command, Flag Officer, Offshore Defence Advisory Group prior to their deployment. A clear one months notice is to be given to facilitate clearance and inspection;(m)all vessels deployed for exploratory work by the permit holder shall obtain prior clearance from the Director General of Shipping in terms of the relevant provisions of the Merchant and Shipping Act, 1958 (44 of 1958) and the rules made thereunder;(n)the lessee shall ensure that intimation regarding awards of contracts to other contracted companies along with details of the contracts shall be forwarded to the Naval Headquarters (Directorate of Naval Intelligence), Ministry of Defence suitably in advance of the operations by the lessee providing six monthly long case on vessels deployment by operating companies;(o)appropriate visa shall have to be obtained from the competent authority for all foreign personnel on board the vessel and for this purpose, the contracted company shall provide a list of such foreign nationals to competent authority for prior visa authorization;(p)the lessee shall take all precautionary measures for safety and security of all vessels and equipments deployed for exploration activities;(q)the lessee shall, for issuing the marine safety warnings, immediately inform the Flag Officer, Offshore Defence Advisory Group and the administering authority, the location indicating co-ordinates of all vessels, existing and under construction offshore installations/platforms, equipment and machinery deployed within leased area and thereafter its new location as and when it is shifted.(2)A production lease may contain such other conditions as the administering authority may deem necessary in regard to the following, namely:(a)the time-limit, mode and place of payment of rents and royalties;(b)the compensation for damage to the marine life and environment covered by the lease;(c)the, restriction of operations in any area prohibited by any authority ;(d)the notice by lessee for commencement of production operations;(e)the provision of proper weighment of mineral despatched;(f)the facilities to be given by the lessee for working other minerals in the leased area or adjacent area;(g)the securing of pits and other excavations;(h)the reporting of accidents;(i)the indemnity to Central Government or administering authority against claims of the parties;(j)the delivery of possession of offshore lease area on the surrender, expiration or determination of the lease;(k)the time-limit for removal of mineral, ore, plant, machinery and other properties from the lease hold area after expiration, or sooner determination or surrender or abandonment of the production lease;(l)the forfeiture of property left after determination of lease;(m)the power to take possession of plant, machinery, premises and mines in the event of war or emergency;(n)filing off civil suits or petitions relating to dispute arising out of the offshore area under lease.(3)The administering authority may, either with the previous approval of the Central Government or at the instance of the Central Government, impose such further conditions as may be necessary in the interest of mineral development.(4)If the lessee does not allow entry or inspection under clause (e), (f) or (g) of sub-rule (1), the administering authority shall give notice in writing to the lessee requiring him to show cause within such time as may be specified in the notice Why the lease should not be determined and his security deposits forfeited; and if the lessee fails to show cause within the aforesaid time to the satisfaction of the administering authority, the administering authority may determine the lease and forfeit the whole or part of the security deposit.(5)If the lessee makes any default in the payment of royalty as required under sub section (1) of section 15 or payment of fixed rent as required under sub section (1) of section 16 or commits a breach of any of the conditions specified in sub-rules (1), (2), and (3), the administering authority shall give notice to the lessee requiring him to pay the royalty or fixed rent or remedy the breach, as the case may be, within sixty days from the date of the receipt of the notice and if the royalty or fixed rent is not paid or the breach is not remedied within the said period, the administering authority may, without prejudice to any other proceedings that may be taken against him, determine the lease and forfeit the whole or part of the security deposit.
