The study and exploration of natural oil and gas reserves in Nepal began several decades ago. Initially, the focus was on drilling deep boreholes at various locations in the Kathmandu Valley to study the type, quantity, and presence of natural gas within the valley basin. At different times, media reports have also indicated that individuals and institutions directly extracted gas from such natural gas reserves in various parts of Kathmandu and used it. However, based on the results of studies conducted so far, the natural gas found in the Kathmandu Valley does not appear to be commercially viable for extraction. Perhaps for this reason, neither the government nor the private sector has shown further interest in developing this resource.
Similarly, petroleum exploration was conducted in various locations of Nepal’s Terai region under the leadership of the Government of Nepal, in collaboration with international private petroleum companies. However, it is understood that this exploration work has been halted for several years. Although various print and digital media outlets have shared different kinds of information on social media regarding this issue, the official government bodies responsible for such activities have remained silent. The availability of petroleum resources in commercial quantities is not merely an economic or business matter; it also carries deep strategic and geopolitical significance, which has been clearly demonstrated by modern history. Therefore, the sudden halt of the initiated exploration work raises serious questions—why?—and also creates room for suspicion.
Natural gas has also been found in other parts of Nepal, such as the Muktinath area of Mustang. In Muktinath, a continuous flame fueled by natural gas has been burning for a long time. Previously, it was difficult to conduct research in this area due to lack of access routes, but now, if the government wishes, it can easily initiate proper studies and exploration. Only after sufficient research can further conclusions be drawn.
Likewise, Nepal has many hot springs in different locations, many of which serve as attractions for both local residents and domestic tourists. These hot water sources are generally mineralized and are believed to have healing properties for various diseases. In particular, such water sources are considered beneficial for skin-related conditions, as also noted in similar natural sources around the world.
Recent studies conducted by the Government of Nepal with the support of the Chinese government have shown that the petroleum site in Dailekh contains natural gas reserves rather than petroleum. However, it has been quite some time since the initial phase of exploration was completed, yet the government does not appear very enthusiastic about conducting further research in the area. Previous studies have indicated that the natural gas reserve in Dailekh is approximately 800 million cubic meters. Located at a depth of about 4 kilometers, such a volume of gas could generally be considered economically viable. The only factor that might reduce its attractiveness would be the presence of other harmful or undesirable gases or liquids mixed with it. However, since no such harmful substances have been reported, it can be reasonably assumed that the gas is available in a relatively usable form.
The exploration conducted in Dailekh was preliminary, and further detailed studies will provide more data about this resource. Such data will help determine the extractability of the gas and assess its economic, social, and environmental impacts. While these aspects are important, as mentioned earlier, such natural resources also have strategic and geopolitical significance. Therefore, it is believed that conducting further necessary exploration and utilizing this valuable resource as soon as possible would be in Nepal’s best interest.
This gas can be used not only for cooking but also for running vehicles, generating energy, and producing chemical fertilizers, among other purposes. If such resources are located near large settlements or cities, their utilization becomes easier. However, in places like Dailekh, which are relatively remote and sparsely populated, the common practice is to compress the gas and store it in cylinders (similar to LPG, though LPG cylinders are smaller because LPG is stored in liquid form, whereas natural gas cylinders are larger as the gas remains in gaseous form). Due to low population density, supplying gas through pipelines near the extraction site may be costly. Transporting compressed gas cylinders to consumption areas would require proper upgrading of access roads, and their maintenance would also be expensive. All these factors influence the economic viability of the extracted gas. However, in my view, it would be appropriate to make this gas field operational as soon as possible—initially at a small scale, and then gradually expanding to full capacity in a second phase.
For the utilization of Dailekh’s gas, it would be suitable to construct a small gas-based power plant in the first phase under Chinese technology and investment involved in the exploration, and bring it into operation as soon as possible, so that it can help improve Nepal’s current electricity system. In the second phase, a thermal power plant with a capacity of up to around 2,000 MW could be established based on this gas field to manage peak demand, including both regular dry-season demand and peak-time demand.
Since constructing such a thermal power plant would take approximately two years, it could help address the projected electricity demand gap in Nepal. Considering the currently projected peak demand of about 2,500 MW during the dry season and an additional 500 MW expected within the next two years—totaling around 3,000 MW—there is likely to be a shortfall of about 1,500 MW. This gap could be effectively managed by supplying electricity from this thermal power plant.
Jalasarokar