Indra Gurung

Kathmandu, March 14:

Due to the unfavourable security situation, Texana Resources Company, which is carrying out petroleum exploration activities in Nepal for the last six years, is likely to suspend its programmes. The US-based company, which was awarded two exploration blocks (no 3 and 5) out of a total 10 for oil exploration in December 1998, has already completed geological study at block 3 in Chitwan and block 5 Nepalgunj, which covers about 10,000 sq km of area.

Of total 10 potential blocks for petroleum exploration, the government awarded five blocks to a British company named Cairn Energy PLC last year. It has started its preliminary activities. A high-level delegation of Texana Resources, led by its president Max Mazy, is arriving in Kathmandu on Monday to assess the situation here in Nepal. The delegation is also attending a quarterly meeting of joint review committee, which comprises of officials of Petroleum Exploration Promotion Project (PEPP) of Nepal and representatives of the company. Mazy is accompanied by Frank C Alexander, legal consultant of Texana Resources and is paying a courtesy call to Kriti Nidhi Bista, vice-chairman of the council of ministers, who also looks after the ministry of industry, commerce and supplies (MoICS). According to a MoICS source, the delegation is also scheduled to meet secretary Bharat Bahadur Thapa.

“According to the terms of agreement, Texana Resources had to carry out geological and seismic survey during the initial exploration period of fours years. But the prevailing security problem here in Nepal has compelled the company to postpone the seismic work at the exploration site,” said a company source. For a seismic study, some minor blasts have to be carried in order to locate drilling points at the identified blocks, which is not possible at present, he said. According to him, the Texana Resource delegation is likely to ask the government for postponement of the seismic study duration.

The government had awarded these two blocks to Texana Resources under a production sharing agreement. The company has to carry out detailed explorations, including seismic work to further define drilling locations. These two blocks cover a combined area of 9,853 square km and are located within the Terai plains of the Ganga basin adjacent to Nepal’s border with India. To date, only limited seismic acquisition has been carried out on the acreage and no wells have been drilled so far, said Bharat Mani Gyawali, chief of PEPP. He also informed that the company could be allowed to carry out the seismic study later, since the present situation is not favourable. “There is a provision that the study period can be postponed,” he said. Every year Nepal imports around one billion litres of petroleum products, which accounts for 56 per cent of the total energy consumption of the country. The rate of import is increasing by around 13 per cent annually, which is also leading to an increase in outflow of cash from Nepal.