Away from oil

  • Nepal must end oil exploration in the Tarai, as it is not worth putting the country’s ecology and economy at risk
- Kashish Das Shrestha
Away from oil

Feb 12, 2015-

Nepal’s Petroleum Exploration Promotion Project (PEPP) first began in 1982, and by 1985, it had divided the entire Tarai region into 10 blocks to be auctioned off for oil exploration to foreign countries. Today, February 13, is Global Divestment Day. It is a good time to begin a serious discourse on Nepal divesting from the PEPP project once and for all, for the sake of the country’s sustainable development, food security, water security, energy security, as well as the security of Nepal’s agriculture-based economy, public health, and ecology. The project also contradicts Nepal’s climate change adaptation and mitigation commitments.

Suspended licences

When the Nepali government decided to open up the country for oil exploration in the mid 1980s, Nepal’s entire southern belt was divided into 10 exploration blocks. Block 10, Biratnagar, was the first to be leased out in 1986 to a Shell and Triton partnership. The project was abandoned when the companies concluded that there was no oil there, though Nepali officials claim they just did not drill deep enough.

Until recently, we had four stakeholders with full ownership of the Tarai for oil exploration—Scottish company Cairn (owners of blocks 1, 2, 4, 6, and 7), American companies Texana (owners of blocks 3 and 5) and BBB Champions Oil (owner of block 10), and a partnership of Champions Oil and Emirates Associated Business Group (owners of block 8 and  9). Cairn and Texana regularly used force majeure and entered self-imposed suspension of work in Nepal. In September 2012, Champions Oil said that they would begin drilling for exploration by late 2013, but that never came to be.

On January 8, it was reported that the Nepali government had cancelled the licences of all the companies. However, the government also announced that they would look for new bidders soon.

Globally, the oil market continues to remain volatile. Some analysts expect crude oil prices to fall further still. It is in such an environment that the Government of Nepal announced its intent to invite new oil companies to make investments in new oil fields in Nepal. Sustainability aside, this proposition makes Nepali policymakers seem oblivious to world events and the oil industry. To sell a product when its market has crashed also ensures the seller a disadvantaged price.

With the licence of all previous foreign companies approved for oil exploration currently void, now is the ideal time to take a logical step and end this exercise that will cause Nepal and the global community more harm than good in the short, medium, and long terms.   

Fundamental science

Burning fossil fuel is one of the lead causes of climate change, and Nepal is one of the countries most vulnerable to climate change, which directly affects our agrarian economy (35 percent of the GDP), our tourism sector (5-7 percent of the GDP), our hydropower-based energy investment and future. Climate change is now also a cause for public health concern.

Nepal’s continued pursuit of oil exploration in its own territory is to essentially fuel the fire that will consume itself, as well as our shared global community. Why would we deliberately encourage an activity that we know will hurt us the most?


Looking at the PEPP map, the Tarai is nothing more than 10 blocks on the international market for a foreign company to acquire and exploit. In reality, it is a region with a unique and rich cultural heritage with strong ties to the lands that local communities have cultivated for generations. The region also makes up for Nepal’s most critical and vast farmlands. A seasonal fluctuation in traditional weather patterns results in highly disrupted food production with direct implications for the country’s annual food security. We have already seen disastrous effects of delayed and dryer monsoons in the last five years, and crop damages from heavy bursts of rain and hail too. Peer reviewed climate change papers anticipate that global agricultural systems will be largely disrupted as weather patterns become increasingly affected.

The Tarai is also facing a land-use crisis, with rapid urbanisation and development of brick kilns where farms once stood. When we already have so much to address, how is it justified for a chronically food insecure nation to convert its farmlands into oil fields? The fact that the entire Tarai has been plotted for oil exploration and production is a dangerous two-pronged assault on the country’s food security and agro-economy.

Nepal’s southern belt is also a critical South Asian ecological corridor for rare and endangered wildlife, home to several of our national parks and countless biodiversity hotspots. The fragile ecology of the south isn’t important simply for the sake of conserving the environment or wildlife, but that ecology is intricately linked to water and soil systems of the region. Seismic tests for exploration alone could cause generations-long damage to the fragile ecology and geology of the area, even if companies agree to stay out of parks and buffer zones.

Divest now

There is no justification for the PEPP to continue in Nepal. Our energy future is based on hydropower with a mix of other renewable sources like solar. Our economy is largely tied to agriculture and tourism: we are inherently an agrarian nation and every six tourists help create one job in Nepal. The PEPP was designed, promoted, and implemented at a very different time in our society, in the development world, and before a clearer understanding of climate change than what exists now with scientific consensus. Today, in light of new and revolutionary energy technologies and greater sustainable development needs, it is time Nepal permanently ended the PEPP for the nation’s own benefit. Meagre royalties are not worth putting the country’s future and decades of careful conservation and restoration of Nepal’s ecology in jeopardy. It is not worth enabling the destruction of our food security or making toxic our farmlands and waterways. Continuing to pursue the PEPP is to deliberately and carelessly lead Nepal down a dangerous road under the false pretence of economic gain. This is why the Government of Nepal must divest from the false dream of a Nepali petro-economy and focus on real progressive sustainable development of the country.

Shrestha is an independent sustainable development policy analyst

Published: 13-02-2015 09:17

User's Feedback

Click here for your comments

Comment via Facebook

Don't have facebook account? Use this form to comment