Major petroleum exploration underway in Dailekh

Petroleum exploration work is progressing in full swing in the Panchakoshi region of Dailekh. Engineers are engaged in drilling operations in Jaljale of Bhairabi Rural Municipality-1, with financial and technical assistance from the China Geological Survey. Drilling commenced last week after completion of various stages of survey in the region.

The drilling is part of the China Aid on Oil and Gas Resources Project, which is being jointly implemented by the Department of Mines and Geology of Nepal, the China Geological Survey and Xibu Drilling Engineering Company. The drilling work began after the Chinese companies supplied and installed the necessary equipment for the final exploration and extraction of petroleum products.

Minister for Industry, Commerce and Supplies, Damodar Bhandari, officially inaugurated the drilling operations. On the occasion, he stated that if the Dailekh mine proves feasible for extraction, it would significantly contribute to the country’s economic prosperity. “If petroleum products are confirmed in Dailekh, it will provide a substantial economic boost to the country. After that, Nepal will be known not as an importer but as an exporter of petroleum products,” said Minister Bhandari. “The drilling work will be completed soon, after which the presence of petroleum products will be ascertained. Further exploration and extraction works will follow.”

According to Dinesh Kumar Napit, chief of the Petroleum Exploration and Promotion Project under the Department of Mines and Geology, a team including Chinese experts has been deployed at the exploration site. “We will drill up to 4,000 meters. After this drilling, we can confirm whether this mine is feasible,” he said. “The possibility of finding petroleum products increases at depths between 3,500 and 4,000 meters, and necessary work has begun in that direction.” Napit said whether the mine will be feasible for crude oil or natural gas can be confirmed only after the completion of drilling, which is estimated to take five months. “We have drilled 53 meters so far,” he added.

Gasses have been burning on the earth’s surface in Dailekh for hundreds of years, and petroleum products have been seeping out in the area from Paduka to Shristhan. According to Napit, this is strong evidence confirming the existence of petroleum products in the area. “However, studies and research need to be conducted to determine the depth, locations, and quantity, and whether extraction will be technically and economically viable,” he added. Previous surveys had indicated the presence of crude oil and gas in the area.

Chure hills and Tarai regions potential areas

Some parts of Nepal’s Chure hills and the Terai region are considered highly potential areas for petroleum products. Accordingly, the Department of Mines and Geology has been conducting studies and research. The Nepal Petroleum Act was enacted in 1983 to regulate petroleum-related provisions in Nepal. The Petroleum Rules were introduced a year later.

“After the Act and Rules came into effect, the Department of Mines and Geology started advancing various studies, surveys and research in potential areas for petroleum products by entering into agreements with international companies,” Napit said. He added that petroleum exploration has also taken place in Bahuni of Morang. “It appears that drilling was carried out up to around 3,500 meters there. However, no petroleum products were found during the drilling process,” he said. In addition to Morang, some areas of the Chure hills and Terai regions were explored for potential oil extraction and exploration.

Exploration in Panchakoshi

In Nov 2015, a Chinese team led by then-Prime Minister KP Sharma Oli and then Industry Minister Som Prasad Pandey arrived in Dailekh. Oli announced that the government would start petroleum exploration works in the area soon. In March of the following year, Nepal and China agreed to cooperate in petroleum product exploration and extraction.

During Oli’s China visit, a bilateral understanding (G2G) was reached between Nepal and China. In 2019, the government approved a program to conduct detailed petroleum product exploration in Dailekh with China’s assistance. The Department of Mines and Geology and the China Geological Survey signed an agreement to explore and extract petroleum products in Dailekh, with financial and technical assistance worth Rs 2.4bn, in the same year. Oli formally inaugurated exploration at the Navisthan site in 2019. The technical teams from the two countries have completed seismic surveys, geological surveys, magneto-telluric surveys, and geochemical sampling surveys so far.