Biosurfactants are amphiphilic compounds produced by microorganisms and have multifarious uses in industry and agriculture. The biosurfactant producing microbes are helpful in bioremediation of heavy metal, pesticides and hydrocarbon contaminated sites. They are also used as bio-control agent to protect plant against various diseases, resulting in higher crop yields. The present study was aimed to isolate potential biosurfactant producing bacteria from oil contaminated sites. Initially 37 bacteria were isolated among them nine biosurfactant produces were screened based on surface tension reduction, emulsification index, modified drop collapse test and oil displacement activity. The isolate FKOD36 was the most effective biosurfactant producer as it showed the maximum reduction in surface tension (35.15 dyne/cm) with an emulsification index of 66.7% and oil displacement activity of 3.7 mm. The bacterium was identified by using partial 16S rRNA sequencing and it belonged to genus Klebseilla, and was designated as Klebseilla sp. FKOD36. The strain was also capable of utilizing phenanthrene as the highest bacterial biomass was produced by this strain in phenanthrene amended MS media compared to other isolates. This suggests that selected strain Klebseilla sp. FKOD36 could have potential to degrade the hydrocarbon contaminated sites that could be helpful in conservation of natural resources.