In a landmark development for India’s energy sector, Assam is set to become the first state government in the country to directly produce crude oil, moving beyond the traditional role of resource provider to an active equity stakeholder. This follows a successful hydrocarbon discovery at the Namrup Borhat-1 well in Dibrugarh district, where the state holds a “significant stake” in partnership with Oil India Limited (OIL).
Chief Minister Himanta Biswa Sarma hailed the development as a “proud moment” for Assam and a major leap forward in energy security and economic resilience. In a post on X, he stated:
“This discovery makes Assam the first state govt to be a direct oil producer, makes exploration efforts successful, empowers Assam with revenue & royalty, and ensures steady availability of energy for the country.”
From Royalties to Revenues
Assam has long been at the heart of India’s oil narrative, having hosted the country’s first oil well at Digboi over a century ago. Today, it ranks third in domestic crude oil production—after Rajasthan and Gujarat—having produced 4,361 thousand metric tonnes (TMT) in 2023–24 alone.
Between 2021–22 and 2023–24, India produced 88,223 TMT of crude oil. Of this, Assam contributed 12,518 TMT, cementing its place as a key onshore player. But until now, the state’s role had been limited to collecting royalties on oil extracted by public and private sector firms.
With the Borhat-1 discovery, Assam now has direct skin in the game—entitled not only to royalties but also a share of the profits (and risks) that come with exploration and production.
Decoding the Stake
While the government has not disclosed the exact size of its stake, a 2020 MoU between OIL and the Assam Hydrocarbon and Energy Company Limited (AHECL) suggests a 10% participating interest in the Namrup Block, which includes the Borhat-1 well.
This means Assam is now a financial and strategic partner, earning directly from the sale of crude oil—marking a structural shift in how states engage with natural resources.
Expanding Energy Equity
This isn’t an isolated move. Assam has been strategically investing in the energy sector over the past few years. In April 2023, the Assam Gas Company Limited (AGCL)—another state-run entity—entered a joint venture with OIL to establish city gas distribution networks across several districts in Assam and parts of Tripura.
The AGCL holds a 51% controlling stake in the joint venture, which includes plans for pipelines, CNG stations, and piped gas supply to homes and businesses. The project, with an authorised capital of ₹500 crore, aims to improve domestic energy access and boost state revenues.
Further, in December 2024, the state cabinet approved a 40% equity stake in the Namrup-IV Fertilizer Plant, operated by the Brahmaputra Valley Fertilizer Corporation Limited (BVFCL)—another sign of Assam shifting from facilitator to investor in core sectors.
A Model for Other States?
By entering the upstream oil sector as a stakeholder, Assam is setting a national precedent—one that may inspire other resource-rich states to seek greater equity in the exploitation of their own natural assets.
As Chief Minister Sarma emphasized, the move aligns with Assam’s larger vision of economic self-reliance, energy independence, and long-term revenue generation.
From being India’s first oil pioneer to becoming its first state-run crude producer, Assam has come full circle—and taken a bold step toward shaping its own energy future.
