Nagaland is sitting on a multi-million dollar oil reserves for decades now. Some estimates suggest the state could yield at least around 600 million tonnes of crude oil. At a time when crude prices are soaring in the global market and India’s economy is feeling the adverse impact, the need for a breakthrough for exploiting Nagaland‘s oil reserves is felt more than ever before.
Nagaland chief minister Neiphiu Rio also realises that exploitation of its oil reserves could be a major turnaround for the state’s economy. So after taking charge, he had made the first moves to placate tribal organisations who are blocking oil exploration in the state.
On July 6, Rio chaired a joint meeting between the state’s Ministerial Group for Petroleum and Natural Gas and the Nagaland Petroleum & Natural Gas (NPNG) Board. This was the first time such a meeting was held after Rio took over as Chief Minister four months ago.
The meeting discussed possible amendments to the Nagaland Petroleum & Natural Gas Rules, 2012. This was clearly aimed at placating the Lotha Hoho, representing Lotha Nagas, which filed a Public Interest Litigation in the Guwahati High Court in 2015.
The Lotha Hoho had steadfastly maintained that their PIL was filed to “sustain the provisions of 371 A”, since the Nagaland Petroleum and Natural Gas (NP&NG) Regulations and Rules 2012, were ” against the rights of the land owners.”
It also accused state government of violating its own existing Act of 1990 by passing the NLA Resolution of 26/7/2010.
The Hoho however made it clear that it was not against exploration, extraction or development of Petroleum and Natural Gas; but was only against some Articles of the Nagaland state NP & NG Regulations & Rules 2012, which are contrary to the provisions of Article 371A.
The Kohima Bench of the Guwahati High Court, in an order dated October 8, 2015, termed the Nagaland Petroleum and Natural Gas (NPNG) Regulations, 2012 and the Nagaland Petroleum and Natural Gas (NPNG) Rules, 2012 as “legally questionable”. It observed that these regulations “do not provide any safeguards and provisions for compensation to the land owners in the process of oil exploration until and unless oil is discovered.”
The Bench, consisting of Justice Ujjal Bhuyan and Justice Manojit Bhuyan, further stayed the permit granted by the Nagaland state government on February 28, 2015, for exploration, production/extraction and refining/bottling of petroleum and natural gas in Wokha district.
That stopped oil exploration which had resumed in Nagaland in 2014 after a gap of long twenty years. Delhi’s Metropolitan Oil and Gas Pvt Ltd had been issued two blocks at Champang and Tsori areas under the state’s Wokha district. Then chief minister T R Zeliang had said that the resumption of oil exploration will usher in a new era of economic prosperity and development of the people of the two villages as well as the state.
Oil was first found at Champang in the 1970s. ONGC had extracted 1.5 million tonnes of oil during its trial production, but Zeliang claimed only Rs 33 crore was paid to the Nagaland government and Rs 63 crore was paid to landowners as royalty.
Champang did not even have a meter gauge to measure the amount of oil extracted, says John Kikon, who heads the Oil and Gas Bearing Landowners’ Union and is secretary of the Naga People’s Front’s youth wing. Landowners had not been consulted before exploration began, he alleges.
Rio is trying to resolve this crisis by promising a change in the NPNG rules and also the language of profit sharing and land access fees for landowners. It is reliably learnt that in the July 6 meeting, Rio pitched for an unambiguous fee structure for the use of different kinds of land for Exploration and Production (E&P) such as farmland or terraced fields. This is in sharp contrast to the current practice where landowners are paid a one-time Rs 10, 000 fee.
Rio has also shown openness to the idea of sharing revenue with the central government. His government led by the breakaway Nagaland Democratic Progressive Party survives on BJP support, so this is hardly surprising.
The only concrete example of a revenue sharing agreement between an oil company and the Nagaland government is the one in 2014 signed with Delhi-based Metropolitan Oil and Gas which was awarded the Wokha and Peren zones (including the Champang oilfield abandoned by ONGC) by former chief minister T R Zeliang.
Last year, Metropolitan agreed to share 18% revenue with the state government – 2% more than the minimum 16% demanded by the NPNG Rules, 2012. Some said 9% would go to the state government and 9% to the landowner.
In his new term as chief minister, Rio is not just interested in a survival game of keeping his BJP backed coalition afloat.
He is focussing on a breakthrough on the economic front and the oil reserves are his expected priority. A model law that gives all stakeholders their due can also be a role model for the rest of the region where resource sharing is going to be a key issue of protest politics in years to come.