Government Explores Alternatives for Early Petroleum Production in Dailekh Amid Delays in Chinese Response

Although the government has committed in this fiscal year’s budget to rapidly advance the commercial production of petroleum in Dailekh, officials have revealed that due to budget constraints, discussions on two alternative approaches have begun. While Chinese technicians have submitted a report confirming the presence of natural gas reserves in Dailekh, no substantial progress has been made toward further necessary exploratory studies for petroleum products, they added.

According to a technical study conducted last year in Jaljale of Dailekh, officials stated that 80.7 billion cubic meters of natural gas were discovered. The government had pledged in this fiscal year’s budget to expedite the commercial production of petroleum in Dailekh. However, only NPR 17.8 million has been allocated for petroleum exploration, an amount primarily expected to cover administrative costs.

Under an agreement between Nepal’s Department of Mines and the Chinese Geological Survey in Chengdu, a technical study conducted at a depth exceeding 4 kilometers in Jaljale, Dailekh, revealed the presence of natural gas reserves. Although the report recommended further testing in the next phase, officials noted that no progress has been made to date. Moreover, Nepal has requested financial and technical assistance from China for this well-testing phase but has yet to receive a response.

Netra Prasad Suvedi, spokesperson for the Ministry of Industry, Commerce and Supplies, told the BBC that while petroleum production is mentioned in the budget, the government is considering two alternatives upon realizing that sufficient funds cannot be fully appropriated. He stated, “We are exploring options to secure resources through various means. Preliminary discussions have been held about advancing by setting up a new company under the Oil Corporation or seeking foreign assistance. However, no concrete steps have been taken yet.”