Print Edition - 2015-01-09  |  MONEY

Govt scraps oil exploration permits

  • Those facing the action are Texana Resources and Cairn Energy
- SANJEEV GIRI, Kathmandu

Jan 8, 2015-The government has scrapped the petroleum exploration licences of all the foreign companies approved to dig for oil in Nepal as they have been sitting idle.

Fresh bids for exploration licences will be invited as soon as the present matter is settled.

The Cabinet decided to revoke the licences of US-based Texana Resources Company and UK-based Cairn Energy PLC last month. The decision to cancel the licences of US-based BBB Champion and Dubai-based Emirates Associated Business Group (EABG) was okayed in November last year.

According to the Ministry of Industry, the Cabinet’s decision to cancel the exploration licences has been published in the Nepal Gazette.

The ministry said that it had been corresponding with the respective companies to inform them about the decision. The government had been thinking of scrapping the exploration licences for a long time since the companies were not making any progress. It has been repeatedly contacting them through the Department of Mines and Geology asking for an explanation for the delay in exploring for petroleum.

While Texana and Cairn had responded to the government’s letters, the other two companies had remained completely out of touch. Cairn had sent two of its senior legal officers to hold talks with the department and the Petroleum Exploration Advisory Board to obtain a legal exit from Nepal.

The government had asked the Foreign Ministry to seek help from the US Embassy in Nepal to find out the whereabouts of BBB Champion after repeated attempts to contact them failed.

“We have directed the department to formulate plans to bring other capable companies to conduct oil exploration,” said Uttam Kumar Bhattarai, secretary at the Industry Ministry.

According to him, the department will first ask these companies to fulfil their liabilities. Once the companies clear their liabilities, a notice will be published to invite new companies.

Meanwhile, Sarbajeet Mahato, director general of the department, said that they were working on the issue. “After all the issues have been cleared, we will be inviting bids. However, the process of calling fresh bids will take some time.”

Nepal embarked on petroleum exploration in the late 1990s with Houston-based Texana received a contract to drill for oil in two blocks, or regions into which the country has been divided for exploration purposes.

The government has divided the Tarai and the Siwalik hills into 10 “exploration blocks” of 5,000 sq km each as being potential oil fields.

The American company had won the bid for Blocks 3 and 5 (in Banke and Chitwan) and entered into an agreement with the government in December 1998.

Six years down the line, in 2004, Cairn Energy received a licence to explore five more blocks—Blocks 1, 2, 4, 6 and 7 (Dhangadhi, Karnali, Lumbini, Birgunj and Malangawa respectively).

Both the companies, however, remained inactive till 2009 following the degrading political scenario caused mainly by the Maoist conflict.  The other two companies -- BBB Champion Company and EABG -- had entered Nepal in 2012.

While BBB Champion acquired a licence for Block 10 in Biratnagar, the EABG received a permit to dig for oil in Block 8 in Janakpur and Block 9 in Rajbiraj.

 

Published: 09-01-2015 09:41

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