MoI told to initiate petroleum exploration work

Kathmandu, March 18

A high-level government committee has directed the Ministry of Industry (MoI) to initiate process of exploring petroleum products in 10 blocks located in the Tarai and Chure area.

The Infrastructure Project Monitoring High-level Committee, led by Deputy Prime Minister and Minister for Physical Infrastructure and Transport, Bijaya Kumar Gachhadar, has instructed the MoI to seek assistance from foreign countries to conduct geological studies and lay the groundwork for exploration of petroleum products in the country.

“Such countries, from which the assistance is sought, must have the capacity and know-how on petroleum exploration,” the committee has said. It has also directed the MoI to table a proposal on it in the Cabinet.

Nepal has identified 10 petroleum blocks in the Tarai and Chure area. These blocks lie in between Dhangadi in the far-west to Biratnagar in the east. Each of these blocks is spread in an area of about 5,000 sq km.

However, this is not the first time that the government has geared up to explore petroleum products in these blocks. The government, in 1985, first signed a four-year pact with Shell Company of the Netherlands and allowed it to conduct exploration in Block 10 (Biratnagar).

Shell even drilled a well of 3,520 metres deep. “But the hole was dry,” as per the Department of Mines and Geology (DoMG). Shell then abandoned the project in 1989 upon termination of its contract period.

Then in 1998, the US-based Texana Resources Company won a government bid to carry out exploration works in Blocks 3 and 5 (Nepalgunj and Chitwan).

In 2004, the government entered into an agreement with UK-based Cairn Energy PLC and allowed it to dig oil in Blocks 1, 2, 4, 6 and 7 (Dhangadi, Karnali, Lumbini, Birgunj and Malangawa).

In 2012, the government roped in two more companies — US-based BBB Champion and Abu Dhabi-based Emirates Associated Business Group — to conduct exploration works in Block 10 (Biratnagar) and Blocks 8 and 9 (Janakpur and Rajbiraj), respectively.

All of these licences were scrapped in 2014, as these companies could not come up with tangible results.

Prior to scrapping their licences, the government had sought clarification from all four companies. But Texana and Cairn could not come up with convincing response, while BBB and Emirates did not even come into government’s contact.

“We are currently mulling over updating data on all petroleum blocks, as we had last conducted survey in the 1980s,” DoMG Deputy Director General Rajendra Prasad Khanal told The Himalayan Times.