Kohima: Nagaland is endowed with substantial reserves of oil and natural gas, yet efforts to tap into this potential have been fraught with challenges. Decades after the first successful oil extraction, the state remains at a crossroads, debating whether oil exploration could be the economic breakthrough Nagaland needs or whether it will continue to be mired in legal and political deadlocks.
The History of Oil Exploration
The Oil and Natural Gas Corporation (ONGC) first discovered oil in Changpang, Wokha district, in 1973, commencing production a decade later in 1983. However, by 1994, operations came to a halt due to multiple factors, including non-payment of royalties and extraction beyond permissible limits. Since then, the issue of oil exploration has been entangled in legal battles, policy disputes, and inter-state negotiations.
The Changpang Oil Block, a 12 sq. km area in Wokha District, was awarded to ONGC in 1973 by the Government of India for crude oil exploration and extraction. ONGC drilled 31 wells, with 21 producing high-quality crude oil and two yielding gas. From 1980 to 1994, the block produced approximately 1.036 million metric tonnes of crude oil, according to the Ministry of Petroleum and Natural Gas.
In May 1994, following pressure from student organisations and mass-based social groups, the Nagaland government and ONGC halted operations in the Changpang-Old Tssori Block. A 2012 report by The Telegraph estimated that during its active years, crude oil production in the block averaged 250 metric tonnes per day (approximately 4,453 barrels daily).
A 1998-99 report by the Ministry’s Estimates Committee noted that ONGC paid ₹33,29,17,727.70 in royalty to the Nagaland government between 1980 and 1994. However, only ₹67,57,000 was distributed to landowners and affected villagers of Changpang and Old Tssori.
In a bid to regulate and revive exploration, the Nagaland government introduced the Nagaland Petroleum and Natural Gas Regulations and the Nagaland Petroleum and Natural Gas Rules in 2012.
That same year, an Expression of Interest (EOI) was floated for oil extraction across 11 zones. Metropolitan Oil and Gas Private Ltd was granted permission to explore and extract petroleum and natural gas in Wokha district, but the move faced legal challenges. A Public Interest Litigation (PIL) was filed, subsequently withdrawn, only for the Gauhati High Court to take up the matter as a suo motu PIL, which remains pending.
The Push for Oil Extraction
The Nagaland government has been engaging with the Ministry of Petroleum and Natural Gas (MoPNG) to resolve the impasse. Since August 2018, negotiations have focused on resuming petroleum operations under the special provisions granted to Nagaland by the Constitution of India.
The oil-rich regions of the state fall along the Disputed Area Belt (DAB) shared with Assam. On September 21, 2021, a high-level meeting was convened in Dimapur with the Union Minister of State for Petroleum and Natural Gas, along with ministry officials. Discussions revolved around allowing oil exploration in blocks designated under the Open Acreage Licensing Policy (OALP) and permitting ONGC to restart operations in Nagaland.
To facilitate this, a Tripartite Memorandum of Understanding (MoU) between the central government, Nagaland, and Assam was proposed, alongside a Bipartite MoU for the resumption of activities exclusively within Nagaland.
The Centre has since provided draft MoUs, with Nagaland submitting its comments and suggestions to MoPNG for incorporation.
An Interim Plan for Petroleum Extraction
During the recently concluded Nagaland Legislative Assembly session, Chief Minister Neiphiu Rio detailed his ongoing discussions with Union Minister Hardeep Singh Puri, dating back to September 9, 2022.
Rio emphasised the need for a policy specific to Nagaland that accounts for its unique socio-political and economic conditions.
Key recommendations included:
- Dividing exploration blocks into smaller segments to attract more bidders.
- Ensuring royalty and revenue-sharing arrangements favor local stakeholders.
- Establishing a refinery within Nagaland to boost local economic benefits.
Rio assured the Assembly that these measures would serve as interim arrangements, pending resolution of the ongoing Supreme Court case, without prejudicing its outcome. He further advocated for equitable royalty-sharing across all sectors of the DAB to ensure fair compensation.
Resolving the Deadlock with Assam
Given the long-standing territorial and resource-sharing disputes with Assam, multiple high-level meetings have been held between the central government, the Nagaland and Assam governments, and MoPNG representatives.
A crucial meeting took place on October 8, 2024, in Kohima, where Nagaland’s special constitutional provisions were reiterated to central officials. Another round of discussions with MoPNG on November 13, 2024, focused on evolving a set of policies tailored for Nagaland. The ministry stressed that economic viability would depend on production volumes achieved post-exploration.
The Economic Boom
If successfully implemented, legislators observed that oil and gas exploration could significantly boost Nagaland’s economy by generating employment, enhancing revenue streams, and improving infrastructure.
Chief Minister Rio acknowledged the state’s paradox of wealth and poverty, stating, “Nagaland is rich, but the people of Nagaland remain poor.” To him, opening up the state for oil and gas exploration and production will definitely improve Nagaland’s finances.
MLA Jwenga Seb highlighted that Nagaland relies on imports for 90% of its energy needs, with petroleum consumption rising from 154 TMT in 2019 to 172 TMT in 2020. He noted that the state falls within the Naga-Schuppen Belt of the Assam Arakan Basin, a region rich in hydrocarbon reserves. A reassessment by the Government of India estimated the basin’s total reserves at 1,633 MMTOE, with only 11% discovered so far, suggesting the potential for untapped oil and gas deposits in Nagaland.
He recounted ONGC’s exploratory drilling and seismic surveys in the 1970s across Wokha, Chümoukedima, and Dimapur, noting that much of Nagaland remains unexplored. He emphasised the need for systematic exploration to accurately assess the state’s resource potential.
To him, the economic benefits of oil exploration will include revenue generation, employment opportunities, and infrastructure development. He advocated for establishing an oil refinery in Nagaland to strengthen industrial infrastructure and create jobs. Addressing legal and environmental concerns, he reaffirmed the protections under Article 371(A) and called for sustainable, community-inclusive policies.
Legislator Lima Onen noted that Article 371(A) is often misinterpreted, hindering the state’s development. While recognising its significance, he argued that its misapplication has delayed progress, particularly in natural resource exploration.
“We are living at the edge of super technology. Today, lasers can destroy settlements, bring down objects from the sky, and extract resources from beneath the ground. By the time we agree to explore our petroleum resources, our oil fields may dry up—and we never know what’s happening in the neighboring states,” he shared.
Minister Jacob Zhimomi advocated a cautious, phased approach to petroleum exploration, emphasizing the need for legal clarity on revenue-sharing in disputed border areas. While supporting the state’s decision to explore petroleum, he raised concerns over revenue distribution in disturbed regions along the Assam-Nagaland border.
In 2022, legislator Mhonbemo Humtsoe claimed that between 2018 and 2022, ONGC extracted 6,57,432 metric tonnes of crude oil from eight fields in this region, generating an estimated royalty of ₹3,399.79 crore. Of this, ₹553 crore was paid entirely to the Assam government. A 50-50 royalty-sharing agreement between Assam and Nagaland, he observed, could have secured ₹276.50 crore for Nagaland during this period.
While the issue was also recently debated in the state Assembly, similar discussions have been ongoing for years, reflecting its longstanding significance.
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