Nepal and India are planning to launch several multimillion-dollar petroleum projects as they explore potential areas of cooperation in the oil sector.

At least three new petroleum and gas pipelines, a liquefied petroleum gas plant and a number of oil storage facilities have been proposed to be built in Nepal while discussions are awaited on the funding modalities, government officials said.

The second meeting of the Nepal-India Joint Working Group on oil and gas cooperation held through video conferencing on August 13 talked about building a natural gas pipeline from Gorakhpur to Bhairahawa and an oil pipeline from Siliguri to Jhapa. Officials also discussed extending the oil pipeline from Amlekhganj to Lothar in Chitwan.

The meeting was chaired by Prem Kumar Shrestha, joint secretary of the Ministry of Commerce, Industry and Supplies on behalf of the Nepal government while BN Reddy, joint secretary at the Indian Ministry of Petroleum and Natural Gas co-chaired the meeting on behalf of the Indian government.

“A number of studies are being conducted jointly for the projects,” Shrestha told the Post.

According to Shrestha, discussions were also held on building petroleum storage facilities in Dhanusha and Lothar besides a liquefied petroleum gas bottling plant in Jhapa.

As per reports, Indian officials are expected to visit Nepal soon to explore possible routes for the new pipelines.

On September 10, 2019, Prime Minister KP Sharma Oli and his Indian counterpart Narendra Modi jointly inaugurated South Asia’s first cross-border petroleum pipeline.

The 69-kilometre pipeline pumps fuel from India’s Barauni refinery in Bihar to Amlekhganj in Nepal. Of the pipeline's total length, 36 kilometres lies within Nepali territory.

According to Nepal Oil Corporation, it has been able to save Rs2 billion annually in freight charges, and also avoid the vagaries of transportation by tanker truck after gasoline started flowing through the pipeline.

It currently takes at least 14 hours to transport oil from Patna in India to Amlekhganj.

Indian Oil Corporation has been the sole supplier of fuel to Nepal Oil Corporation since 1974.

Shrestha said that detailed project reports of some of the schemes are being prepared, and a number of them are at the final stages.

In February, a team from Indian Oil Corporation, which built the Amlekhganj pipeline, conducted a survey for the pipeline connecting Nepal Oil Corporation's depot at Charali, Jhapa with Siliguri, which lies across the eastern border in West Bengal, India.

Experts carried out the survey in Batasi in northern West Bengal, about 3 kilometres from the India-Bangladesh border and Jyamirgadi in Jhapa. The survey team also studied three rivers—Mechi, Ninda and Hadiya—on the east-west highway, according to officials at Nepal Oil Corporation.

The distance between the Indian Oil Corporation depot in Siliguri and the Nepal Oil Corporation depot in Charali is 50 kilometres.

According to Shrestha, the feasibility of all new projects is being discussed at the request of the Nepal government.

The Economic Times published from India reported that a team of Indian officials would soon visit Nepal to explore the possible routes for a new product pipeline which would be followed by feasibility studies before investment decisions are finalised.

“There is potential for expanding the pipeline network that would bring a lot of savings for the Himalayan country,” the daily said.

According to the Trade and Export Promotion Centre, the country imported petroleum products worth Rs164 billion in the last fiscal year, a year-on-year drop of 24.2 percent caused by Covid-19 restrictions that kept most vehicles off the roads.

India fulfils all of Nepal's oil requirements.