The prospects of petroleum production this time around seem bright as a British Company has been spearheading exploration in five different areas across the country. There are hopes also because a US company has reportedly assured resumption of its incomplete exploration in two areas.[break]
Cairn Energy PLC, UK, has been continuing exploration in Dhangadhi (Block 1), Karnali (Block 2), Lumbini (4), Birgunj (Block 60) and Malangawa (Block 7) after resumption of its work last December. The company had signed an agreement with the government of Nepal in this regard on August 4, 2004 but could not function after a year due to security reasons.
Nepal had failed to produce petroleum in Biratnagar nearly two decades ago.
According to Shyam Bahadur KC, chief of Petroleum Exploration Promotion Project (PEPP), the Houston-based Texana Resources Company has assured revisiting Block 3 (Nepalgunj) and Block 5 (Chitwan) next winter. The company had left Nepal after working for two-and-a-half years from 1998 due to security reasons.
“Texana has vowed to resume exploration from coming winter,” said KC. “But they have not yet furnished their further action plan as yet.”
Both companies are subject to initial exploration period of four years which is extendable. “The companies” term can be extended on essential grounds,” he added.
The principal law governing the petroleum operations in Nepal is the Nepal Petroleum Act 1983 which is supplemented by Petroleum Regulations (1985). As per these laws, the contractors should pay the government a royalty of 12.5 percent and a 30 per cent income tax on petroleum production.
According to PEPP officials, the prospect of Cairn Energy PLC has brightened along with its progress in exploration works. It has just to go through two more phases -- Airborne Survey and Seismic Survey --before drilling wells.
“This is a good progress,” said KC. The company has also been known for its performance in energy production in neighboring countries like India and Bangladesh.
India is considered to have contained sedimentary basins which are important for hydrocarbon explorations. The Tarai-northern extension of Indo-Gangetic plain-and Siwalik Range of Nepal have been divided into 10 exploration blocks, each of approximately 5, 000 square km.
“The chief rationale behind probabilities of finding oil wells in Nepal is its geological environment. India has been producing petroleum in Assam that is geologically similar to Nepal. The same environment stretches up to Pakistan which also produces petroleum,” said KC.
Nepal”s hunt for petroleum has spanned more than two decades. Besides seven exploration blocks being undertaken by foreign companies, there are still three blocks- 8 (Janakpur), 9 (Rajbiraj) and 10 (Biratnagar) -- left open for bidding.
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