Dailekh, 20 June: At a time when the country is annually importing over 500,000 metric tons of liquefied petroleum (LP) gas worth Rs. 55 billion, domestically discovered natural gas has been found with the potential to replace it.
A study conducted by the China Geological Survey has revealed that there is a reserve of 112 billion cubic meters of natural methane gas in Jaljale, located in Bhairavi Rural Municipality of Dailekh. Preliminary findings from the survey, which began in 2019, suggest that Nepal has enough natural gas to meet its needs for the next 50 to 60 years. Once production begins, the natural gas could potentially replace the import of LP gas.
The preliminary report of the study indicates that production testing could begin within a year. The study was conducted over six years at a cost of Rs. 2.17 billion, funded by a grant from the Chinese government. The Chinese research team, through the Department of Mines and Geology, recently informed the Ministry of Industry, Commerce and Supplies that natural gas has been discovered.
Industry, Commerce, and Supplies Minister Damodar Bhandari stated that once the detailed report of the study is received, production and testing work will begin within a year. “It has been confirmed that there are 112 billion cubic meters of natural gas in Dailekh. Further investment will be needed for production and processing. We will request the Chinese government for support through the Ministry of Finance,” said Minister Bhandari.
He informed that initial production of the gas will begin within 75 days after receiving the detailed report. As a large quantity of high-quality natural gas has been identified, the production and processing process will be expedited as much as possible. Minister Bhandari also noted that this discovery has the potential to significantly reduce the country’s gas imports.
Dinesh Kumar Napit, Deputy Director General and spokesperson of the Department of Mines and Geology, stated that the preliminary study has revealed a large quantity of environmentally friendly natural gas. He said it is estimated to be worth around 85 billion US dollars. While natural gas is used widely around the world, it is new for Nepal and is considered more environmentally friendly than LPG gas, he added.
He further explained that instead of petroleum liquid oil, a large reserve of natural gas has been found, with over 90% of it being methane gas.
This gas is considered suitable for cooking, running industries, generating electricity, and powering automobiles. With the preliminary study in hand, the department has begun the process for testing. The Ministry also stated that China has proposed to carry out the gas testing itself in addition to conducting the study.
The study has revealed that a total of 4,013 meters have been drilled so far for natural gas exploration, and more than 90% of the gas found in these areas is methane. For commercial production, it will be necessary to either use the existing company, establish a new one, or allow private sector involvement in production.
In 2016, during then-Prime Minister KP Sharma Oli’s visit to China, an agreement was made for China to conduct a feasibility study of petroleum resources in Nepal. Similarly, in August 2017, a further agreement was signed with China for assistance in petroleum resource studies. In February 2019, a formal implementation agreement was signed between the Department of Mines and Geology and the China Geological Survey. The deadline for submitting the final report of the preliminary study is December 2025.
Meanwhile, it is estimated that large reserves of natural gas may also exist in three other locations—Dang, Palpa, and Sunsari—where the Department estimates around 430 billion cubic meters of gas. However, studies in those areas are yet to be conducted.
How the Exploration Happened
China’s CNPC Xibu Engineering Company began drilling operations on Baisakh 28, 2080 (May 10, 2023), reaching a depth of 4,013 meters. An agreement worth NPR 2.4 billion was signed with the Chinese Geological Survey Company for financial and technical assistance in the excavation. The China Geological Survey is preparing to submit its final report by December 2025. The federal government has also approved the acquisition of 45 ropani (approximately 2.3 hectares) of land to move forward with petroleum resource exploration.
