Dailekh Petroleum Drilling to begin post Elections, awaiting Chinese green-light

The Dailekh Petroleum Investigation Project undertaken by the Chinese Government and the Department of Mines and Geology under the supervision of the Nepali government is set to enter the second stage of petroleum investigation following the Local Level elections.

“The Chinese delegation awaits permission from the Chinese Government, we’ve also asked them to avoid the limbo of the elections and begin work after the local level elections to avoid any transportation or logistics-related hassle,” informs Sudhir Rajaure, Director General of the Department of Mines and Geology.

The Chinese Geology team, which has undertaken the task of conducting drilling research activities in the Dailekh region to verify the initial fact-finding mission that concluded the presence of Petroleum in Dailekh was supposed to begin work in 2019. However, due to COVID, the research team had to return home and haven't been able to come back to finish the task yet.

The initial G2G(Government to Government agreement) that was entered into by the Chinese and Nepal governments on the 23rd of August, 2017 would see the Chinese Government provide the Nepalese Government with economic aid for petroleum-related projects. To implement this very project, on the 28th of May, 2019 the China Aid on Oil and Gas Resources Survey and the Department of Mines and Geology, Nepal entered a working agreement which handed the duties of research to the Chinese research team.

After conducting magneto telluric Surveys and Mapping surveys the team put forth the conclusion that there was petroleum in the Dailekh region.

The team was set to drill to a depth of around 4,000 metres to ascertain the level of gas present underground, however, due to the pandemic, this could never take place. The unforeseen delay has seen an extension to the initial agreement up to 2024 to complete the fact-finding project.

“The drilling is done to estimate the amount of petrol there is in that area, if there is any petroleum found at all then we move onto feasibility studies where we gauge the economic, environmental and investment feasibility for this possible petroleum extraction site.” elaborates Shova Singh, Senior Divisional Geologist at the Petroleum Exploration Promotional Project. Speaking of the feasibility of such a project in Nepal, she mentioned that the capital needed to invest in such a drilling and investigation project is significant, reaching hundreds of millions.

 “Hence for a nation like Nepal that previously put millions into a project a couple of decades back, investing tons of money and drilling thousands of metres to find no petroleum, losing all that investment, it is a tall order to fully commit to another similar gas venture. There are also diplomatic and legal ramifications that come if they do find petroleum as the legislation that governs these aspects isn't airtight yet” concludes Rajaure.

The simple matter of fact is that Nepal has neither the economy nor the manpower to commit to such projects hence it turns to international allies such as China in this case to fund and run their mineral project for them, sharing the spoils while being alleviated of the risk factor of the investment: a model that has seen success but comes with its fair share of cons.