Nepal | March 31, 2020

Govt to reopen licences for petro extraction and exploration

Himalayan News Service

Kathmandu, July 30

The government is preparing to reopen licences for foreign companies for petroleum extraction and exploration in the country.

Though different foreign companies had acquired oil exploration licence in Nepal before, the government had scrapped all the licenses in 2014 as they could not come up with tangible results.

However, the Department of Mines and Geology (DoMG) is all set to publish a global tender notice yet again calling foreign bidders for the exploration of petroleum products in different feasible petroleum blocks which have been
identified to have oil reserves.

“The government earlier had scrapped the licences of the companies as they were only holding on to the oil exploration licences and were not doing anything substantial to actually begin the petroleum exploration works,” said Rajendra Khanal, director general of DoMG. As per him, DoMG this time will give exploration licences to only capable foreign companies that can start petroleum exploration works as soon as possible.

As per DoMG officials, the department this time will give high weightage to the technical proposal of foreign companies over the business proposal while issuing the licences for petroleum exploration and extraction.

“The Cabinet has recently endorsed the amendment proposal of a guideline on petroleum exploration. We will start the process to invite proposals for oil exploration and extraction licence as soon as the amendment notice is published in Nepal Gazette,” added Khanal.

A study so far has identified a total of 10 sites across the country— basically in Tarai and Chure area — which are feasible for extraction of petroleum products. These blocks lie in between Dhangadi in the far-west to Biratnagar in the east and each of these blocks is spread in an area of about 5,000 sq km.

Earlier in 1985, the government had signed a four-year contract with the Netherlands-based Shell Company to explore petroleum reserves in Biratnagar (Block 10). The contract was terminated in 1989, after the Dutch company could not come up with tangible results despite completing drilling works.

Similarly, Texana Resources Company of the United States was awarded the licence to conduct petroleum exploration works in Blocks 3 and 5 (Nepalgunj and Chitwan) in 1998. Likewise, UK-based Cairn Energy PLC, BBB Champion of United States and Emirates Associated Business Group of Abu Dhabi were also given licences to explore and extract oil in different petroleum blocks.

However, none of these companies could provide a tangible result on petroleum exploration.

Meanwhile, Khanal said that the government will open only a few identified petroleum blocks for exploration and extraction in the first phase.

A version of this article appears in print on July 31, 2017 of The Himalayan Times.

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