Nagaland CM pushes for resumption of oil exploration, calls for revenue-sharing model

Nagaland Chief Minister Neiphiu Rio has reaffirmed his government’s commitment to resuming oil exploration and extraction in the state, citing its potential to boost state revenues and unlock economic opportunities.

Speaking in the Assembly, Rio highlighted that Nagaland has significant oil reserves, with exploration dating back to 1973 when ONGC discovered oil in Changpang, Wokha district. 
However, production was halted in 1994 due to royalty disputes and overproduction beyond permitted limits.

To restart operations, the Nagaland Petroleum and Natural Gas Regulations and Rules were notified in 2012, and in the same year, permits were issued to Metropolitan Oil and Gas Pvt. Ltd. for exploration in Wokha district. However, legal challenges, including a Public Interest Litigation (PIL) and a suo motu case by the Gauhati High Court, stalled progress.

The state government has been in discussions with the Ministry of Petroleum and Natural Gas (MoPNG) since 2018 to resolve the deadlock and ensure that petroleum operations align with Nagaland’s special constitutional provisions.

Rio revealed that a key meeting was held in Dimapur on September 21, 2021, with the Union Minister of State for Petroleum and Natural Gas and officials from MoPNG. The discussions focused on permitting oil and gas exploration under the Open Acreage Licensing Policy (OALP) and allowing ONGC to resume operations in Nagaland and the Disputed Area Belt (DAB).

As a next step, a Tripartite MoU between the Government of India, the Government of Nagaland, and the Government of Assam, along with a Bipartite MoU for Nagaland, was suggested. The Centre has already shared draft MoUs and the state has provided its feedback.

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In September 2022, Rio met Union Petroleum Minister Hardeep Singh Puri and urged the Centre to formulate a policy specific to Nagaland. His key proposals included:

> Smaller oil blocks to attract more bidders.
> Revenue and royalty sharing with local communities.
> Setting up a refinery in Nagaland.

Acknowledging the ongoing Supreme Court case related to the issue, Rio suggested that these measures could serve as an interim arrangement without affecting the legal proceedings. He also proposed that royalty revenues be equally shared across all DAB sectors (A-F) until a final settlement is reached.

To further discussions, the MoPNG formed a High-Level Committee, which met in Kohima on October 8, 2024. The Nagaland government reiterated the state’s constitutional special status and emphasized the need for a customized policy framework.

Another round of talks was held on November 13, 2024, where MoPNG highlighted that the economic feasibility of operations would depend on the volume of production post-exploration.

Rio concluded by stating that restarting oil and gas production would significantly improve Nagaland’s financial standing, reducing its dependence on central funds.

"Nagaland is a resource-rich state, but our people remain poor. We must find a way forward to responsibly explore and extract petroleum for the benefit of our citizens," he asserted.