A joint team of Chinese experts and Commerce Ministry officials has started a feasibility study on petroleum gas and mineral oil exploration in Shreesthan, Dailekh.

Industry Minister Som Prasad Pandey formally handed over the job of carrying out the study to the Chinese team here on Saturday.

“The study has been commenced with support from the Chinese team of experts as part of an understanding made during Prime Minister KP Oli’s visit to the northern neighbour,” said Pandey, adding the team studied the area for five months before formally launching the feasibility study.

The government has divided the Tarai and the Siwalik hills into 10 “exploration blocks” of 5,000sqkm each. The Shreesthan site falls under the Block 2. The six-member Chinese team is led by senior geologist Xyang Dakyun.

The joint team will also hold similar studies in 10 other places, including Nepalgunj, Chitwan, Mustang, Morang, Chatara and Chure Range of Palpa.

Sudhir Rajauriya, joint-secretary at Department of Mines, said the study will find out the exact quantity of petroleum products and mineral gas existing at the Shreesthan site.

Pandey added the government will hold feasibility studies in all potential petroleum exploration areas in the next three years.

The Ministry of Industry plans to distribute methane gas through pipelines in the Kathmandu Valley. There are 72 gas methane fields within 25km radius of the Valley, according to a study by Japan International Cooperation Agency (Jica). “However, a recent study has shown a few of the gas fields have dried up. And, the plan to distribute methane gas through pipelines in the Valley has faced delays due to shortfall of technology and experts.” said Minister Pandey.

After Nepal embarked on petroleum exploration in the late 1990s, a number of foreign companies expressed interests in working in country. However, citing slow progress of these companies, the government, a few months ago, scrapped licences of all the companies.

Among the companies whose permits were scrapped included two companies from the US—Texana Resources Company and BBB Champion—UK-based Cairn Energy PLC and Dubai-based Emirates Associated Business Group (EABG). After scrapping the permits, the government has been planning to announce fresh bids for petroleum exploration.