Assam’s oil venture: A strategic step amid India’s growing energy demands

In a happy augury for the State’s hydrocarbon sector, Assam is set to become the first State government in India to play a direct role in oil production.

It also marks a turning point in the country’s energy sector, which is expected to boost the State’s finances by way of enhanced revenue and royalty. The development comes in the wake of a hydrocarbon discovery in the Namrup Borhat-1 well, located in Dibrugarh district. This is a project in which the Assam government will be holding a significant stake alongside public sector oil major Oil India Limited (OIL).

In sync with Assam’s cherished history of oil exploration in being home to the country’s first oil well at Digboi over a century back, it has been able to retain a position of dominance in domestic crude production. As per official data, in 2023-24, the State produced 4,361 thousand metric tonnes (TMT) of crude oil, ranking third after Rajasthan and Gujarat.

The new development adds another critical aspect to Assam’s role as an oil producer in that with its new direct stake in upstream oil operations, the State is no longer just a crude supplier. Now it is a partner in production, entitled to a share of both revenue and risk.

Notwithstanding the positives, the days ahead for the country’s oil sector are going to be tough and how it tackles those will have a bearing on not just the country’s growing energy needs but its economy as a whole. With the country importing 70 per cent of its crude oil requirements, there is an urgent need for increasing domestic production.

As for the State, its four refineries ought to be fed with crude oil produced in the Northeast. To meet all these challenges, oil companies, OIL in particular, have to intensify exploration activities and discover new hydrocarbon reserves. According to geologists, many areas across the Northeast still abound in hydrocarbon reserves that await exploration.

New discoveries will help stabilise energy demands to a large extent. It is to its credit that OIL has been able to establish its presence in eight countries in a few years after being empowered by the Government of India to acquire overseas exploration and production blocks. OIL would also do well to further expand its overseas operations.

While its past exploits have been remarkable, especially at its nascent stages in the face of technological and logistical constraints, the time has come for the company to shoulder greater responsibility against the backdrop of a global recession and depleting energy sources coupled with multiplying demands.