• Nepal Geological Map

    Geologically, Nepal is broadly divided into five major tectonic zones. These zones include Terai, Siwalik, Lesser Himalaya, Higher Himalaya and Trans-Himalayan zones from south to north respectively. read more

  • Exploration Acreage

    The location, number, name and area of all the exploration acreages. Blocks no. 3 and 5 are awarded to Texana Resources Company, Houston, USA. read more

  • Various play (Trap) Types of Nepal

    The principal play recognized in southern Nepal lies in the Surkhet Group with indigenous source, reservoir, and seal, and with a wide variety of potential trap types. read more

  • Key Country Facts

    Land locked Asian nation in the Himalaya mountain range, with India to the east, west and south and the People's Republic of China (Tibet) to the north. read more

  • Geological Setting

    Schematic cross Section through central Nepal read more

Exploration Opportunities

Petroleum Exploration Status in Nepal

A series of geological, geochemical and geophysical data exist in Nepal. Petroleum Exploration Promotion Project , Department of Mines and Geology has carried out geological , geochemical and geophysical studies in southern parts of the country with the technical assistance of various international companies and financial assistance of the government of Nepal(GON) and World Bank in the past.

The geological data include regional to detailed surface mapping, stratigraphy and structural studies at known oil and gas seeps and analysis of the major rocks units to determine the quality of prospective reservoirs, seals and source rock. The geophysical studies include gravity, aeromagnetic and seismic survey. The gravity survey provides bouguer maps over the entire Terai area while the aeromagnetic survey provides comprehensive data over both the Terai and Siwalik fold belt. Over 5000 line km. of multi-fold seismic data acquired since 1982 provides regional seismic coverage of most of the Teari and limited coverage in the Siwaliks. A number of valuable geophysical interpretation reports exist in the Petroleum Exploration Promotion Project, Department of Mines and Geology. A detailed seismic survey data also exist in the easternmost part of the country.

A valuable information regarding to source rock distribution, their organic content and thermal maturity also exist. Beside these, a photo geological study exists over the entire Terai and Siwalik fold belt. An exploratory test well was drilled in the seismically defined structure of the exploration block no. 10. The data obtained from the drilling has created a valuable database for the exploration venture.

The petroleum oil and gas promising area lies in the Terai and Siwalik belts which have been divided into 10 exploration blocks, each of approximately 5,000 sq. km. in area. These blocks were opened for bidding exploration acreage in 1985 for the first time .

There is a large pool of cheap skilled and unskilled manpower which will keep the operating costs relatively low.

History of Exploration

A series of geological, geochemical and geophysical works were carried out after the completion of the aeromagnetic and seismic reflection survey in a regional grid pattern by the Companies General de Geophysique (CGG) and Petro-Canada (over 3,000 line km).

Hunting Geology and Geophysics Ltd. (1985) conducted a photogeological study over 60,000 sq. kms. area of the southern Nepal. It has been useful to establish the structures in Siwalik belt.

Shell Nepal B.V. (1986-90) carried out exploration works in Nepal (Block 10) including geochemical study of seep samples. It has also acquired gravity and seismic survey (over 2,000 line km) in close grid pattern. The company had drilled an exploratory well (TD 3520m) to test the hydrocarbon potential of a seismically defined structure. The hole was dry and did not penetrate up to the basement. The result obtained from the drilling has created a valuable database for the exploration venture.

Since 1982-1992, over 5,000 km of multi-fold seismic data has been acquired. The field survey provides regional seismic coverage of most of the Terai and limited coverage in the Siwaliks.

The data has been processed and interpreted by different seismic service agencies. A number of valuable geophysical interpretation reports are available in the Kathmandu Data Centre.

Regional Hydrocarbon Occurrences

In the regional hydrocarbon occurrences, it is noteworthy that the Ganga Basin of Nepal is on a trend with the Potwar Basin to the west in Pakistan and the Assam Basin to the east in India. Both of which have similar geologic histories to Nepal and have proven to be hydrocarbon bearing with a long history of successful exploration and production operations.

A number of wells are drilled in the Indo-Gangetic Plain all along the southern border of Nepal by Indian Oil Companies and have shown some positive results for hydrocarbon in the northern part of this Ganga Basin .

Occurrence of Oil and Gas Seeps

There are two areas of confirmed seeps in Nepal, both lying north of the Main Boundary Thrust (MBT).

Muktinath gas seep - an active gas seep has been known since the beginning of historical times in the Muktinath region of northern Nepal. The seep emanates from Jurassic beds in the Tethys facies north of the MCT and for this reason it is thought to have no relation to petroleum possibilities in southern Nepal.

Dailekh oil and gas seeps - in the Dailekh region of western Nepal, at a location 30 km north of the Main Boundary Thrust (MBT), is located a series of seeps which are of major importance in the exploration for hydrocarbons in Nepal. There are some 45 separate gas seepages, many of which have religious temples constructed over them. The gas seeps are continuously coming out up till now . The oil seeps are occasional and recorded during the rainy season .

The oil samples and several gas samples were obtained from seepages in the Dailekh area. These samples have been analyzed and indicate that this oil and gas has a geological origin from a mature source rock. Chromatograms suggest the oil samples represent light (mature) oil that has been severely biodegraded. The presence of C2 and higher molecular weight gases and their isotopic composition indicate the gases are thermogenic and derived either from a mature source rock or from the cracking of oil, rather than a shallow biogenic source. The proportion of higher homologies (C2 to C5) suggests that the gases were associated with oil. Combining the interpretation of the four analysis implies that the seeps originate at depth and are migrating rapidly to the surface along steep faults in the metamorphic rocks. The most likely ultimate source is a ruptured reservoir in non-metamorphic Paleogene beds underlying the thrusted metamorphic rocks at a shallow depth. These Paleogene beds might have some geological relation with the subsurface palaeogene beds of the south lying Ganga Basin.

The Palaeogene beds along with some other sediment are proved as source rocks in Potwar of Pakistan in the west and in Assam of India in the cast. The geological conditions as in Potwar and Assam does exist in Nepal also. Therefore, Palaeogene and other sedimentary formations in the subsurface of Terai and Siwaliks are potential for the hydrocarbon exploration in Nepal. And the seeps are of importance in the search for oil and gas.

Structural Trapping Mechanisms

The principal play recognized in southern Nepal lies in the Surkhet Group with indigenous source, reservoir, and seal, and with a wide variety of potential trap types.

The Paleogene is the imputed source for the Dailekh oil and gas seep area of western Nepal. It is also considered to be a source rock in the Terai and Siwalik of the southern Nepal. Secondary plays, alluded to above, embrace the lower Siwaliks, the Gondwana and possible Upper Vindhyan reservoirs.

The regional seismic grid over most of the Terai and part of the Siwalik Fold Belt has allowed identification of a number of different structural leads. It has allowed identification of a number of different structural trap.

On the other hand, when Shell acquired their 2000 km. detail grid in Block 10, they were able to identify numerous prospects and leads not previously seen on the regional grid. This same phenomenon is expected to be generally true in the remainder of Nepal because of the similarity in geologic history.

The trapping mechanisms include anticliners and thrust faults developed in the Siwalik Fold Belt and "blind" thrusts developed under the Terai ahead (south) of the Main Frontal Thrust. In addition, under the Terai we can expect structural closures associated with basement controlled faults, graben edge folds and fault closures, draping over pre-existing highs, and stratigraphic traps caused by reservoir pinch out, facies changes, permeability barriers etc.

The limited seismic lines in Siwalik foothills indicate major folds and thrust faults with substantial potentially prospective pre-Siwalik which is supported by gravity survey and also by surface geology.

Source Rock Maturity Basin Modeling

A considerable geochemical work has been done in Nepal. The oil seep of Dailekh in Western Nepal is a high grade, mature, biodegraded crude interpreted to have come from a conventional mature source rock. These hydrocarbon seeps occur in fault trend from metamorphic rocks indicating that source rocks are buried below the thrusts and expelling hydrocarbons.

A modeling study was conducted for three widely separated locations in southern Nepal using a numerical technique, which calculates a one dimensional model of the evolution of sediment compaction and hydrocarbon generation. Input parameters to the model include the thickness, age and lithology of the rocks, a description of the source organic matter and the current and past heat flow or temperature parameters.

Models were constructed for eastern (Biratnagar-1), central (Lumbini) and western (Dhangadi) Nepal. The Shell Biratnagar-1 well was used to calibrate the model for eastern Nepal. In addition, outcrop information and subsurface seismic data were also used. An example of the output is given in Figure below which is the burial depth versus maturity plot for Lumbini, central Nepal. It is clear from this Figure that the Suntar, Swat, Melpani and Gondwana units fall within the oil window, whereas the Lakharpata unit is well within the gas generating window.

Data Sales Packages

The geological and geophysical works carried out by Petroleum Exploration Promotion Project, DMG meets the international standard of oil industry. The database contains over 5000 km of multi-fold seismic reflection data and a number of valuable geophysical as well as geological reports including an update well data.

The data base is divided into 21 different Data Sales Packages (DSP) from "A" to "U". A General Report, which is a summary document, is available at a price of US$ 5,000.00 per copy. It covers the general aspects of the technical hydrocarbon potential, the fiscal terms and work obligations expected for operations in Nepal. The document contains sufficient detail for a company to make an informed decision about the hydrocarbon potential of the country and furthermore contains a working economic model on 3.5" diskette (either in Excel or Lotus 1 2 3 ) suitable for cash flow sensitivity analyses. Purchase of the General Report is a pre-requisite for companies wishing to purchase other data, visit the Kathmandu Data Centre or to lodge a formal bid for exploratory lands

Petroleum Legislation

There are two sets of enabling legislation which govern the negotiation, the conduct of petroleum related operations and the fiscal treatment of these activities. These are :

  1. Nepal Petroleum Act, 2040 (1983)
  2. Petroleum Regulation, 2041 (1985), the Petroleum (First Amendment) Regulation, 2046 (1986), and Petroleum (Second Amendment) Regulation, 2051 (1994),

Nepal Petroleum Act, 2040 (1983)

This is the broad enabling legislation which permits Government to enter into Petroleum Exploration and Production Agreements, with suitable (international) oil companies ("CONTRACTOR"). The Department of Mines and Geology is designated to administer the application for and negotiation of Petroleum Agreements.

Petroleum Regulation, 2041 (1985) with Amendments

These rules which expand on the Nepal Petroleum Act, established the procedure for bidding, evaluation of bids, negotiations and granting of Petroleum Agreements. It specifies the Department of Mines and Geology as the responsible agency for negotiation of Petroleum Agreements and their administration subject to the Petroleum Act

A second amendment contemplates the following :

  1. Contractor may hold more than one block. "No Ring Fencing" of blocks is allowed
  2. the recognition of a "seismic option" as an acceptable bid;
  3. the designation of the Secretary Ministry of Industry as the signatory of the Petroleum Agreement on behalf of Government, and
  4. the delegation of greater operational authority to the Project Chief, Petroleum Exploration Promotion Project (PEPP).

Schedule 2 of the Regulations contains the complete Model Petroleum Agreement, which acts as the basis for bidding, negotiation and administrator of such Agreements

Model Petroleum Agreement

This document acts as the basis for bid preparation, evaluation, negotiation and subsequent administration of the Agreement. The Production Sharing Contract (PSC) is well constructed and fair. It recognizes the relatively high risk of exploration ventures in Nepal and make allowances for this fact in the relaxed and attractive terms. Having the Petroleum Exploration Promotion Project (PEPP)/Department of Mines and Geology (DMG) act as the single focal point for all operational, tax and legal questions is a significant advantage.

Some of the advantages of the PSC are the fact that there is no requirement for signature or production bonuses, no stipulated government participation or back-in-right, a substantial amount of cost oil is given, liberal amortization and loss carry forward provisions are in place and all import duties are waived. Repatriation of profits is allowed as in the export of the contractor's share of petroleum. Repatriation can be done in any foreign currency and conversion is guaranteed at market rates. There is no requirement to take partial payment in Nepali Rupees pegged at an artificially low rate.

Foreign Investment Policy

Nepal has accorded high priority to encourage foreign investment in the country. With economic liberalization policy of the government and attractive fiscal terms available, Nepal is committed for full cooperation to the international oil companies in facilitating petroleum operation in the country.


Latest Notice

01 2016 Aug

Nepal Government has terminated the existing petroleum agreement

Nepal Government has terminated the existing petroleum agreement with oil companies in Nepal. The Petroleum Exploration Promotion Project…

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Contact us

Petroleum Exploration Promotion Project
Ministry of Indsutry
Government of Nepal

Lainchur, Kathmandu,

Tel : 977 (1) 4410605,
977 (1) 4413541

Fax : 977 (1) 4411783

Email : pepp@wlink.com.np