PEPP gives clean chit to Cairn Energy

KATHMANDU: The Petroleum Exploration Promotion Project (PEPP), under the Department of Mines and Geology, has given clean chit to the Cairn Energy PLC — a Scottish oil and gas exploration company that was involved in the petroleum exploration in Nepal since 2004 — after it cleared all its obligations to the government.

Out of four companies, Cairn is only the company that has cleared its obligation after the government scrapped the petroleum exploration licence.

Cairn has sent $516,409 to the PEPP as it failed to work properly as per the agreement, said Somnath Sapkota, chief of the project as well as deputy director general of the Department of Mines and Geology.

As per the agreement, Cairn was obliged to pay land rental tax of $10 per square kilometre after expiry of its contract period of six years. Cairn Energy had received a licence to explore five blocks — Blocks 1, 2, 4, 6 and 7 namely, Dhangadhi, Karnali, Lumbini, Birgunj and Malangawa, respectively.

The PEPP had asked Cairn to submit its obligation after its frequent attempts to dig oil failed. “We finally had to issue a warning to Cairn and other firms involved in petroleum exploration about blacklisting them,” said Sapkota. Cairn then agreed to clear its obligation but three other firms, namely, US-based Texana Resources Company, US-based BBB Champion and Dubai-based Emirates Associated Business Group (EABG) have yet to clear their obligations.

Texana Resources is the oldest firm to have obtained licence to dig oil in Nepal in 1998. It had received a licence to explore blocks 3 and 5 (Chitwan and Kapilbastu) but had halted its work during insurgency quoting the provision of force majeure.

After the establishment of the peace process, the Project had called the firm to resume work but it refused to do so citing difficult and unpredictable environment in the country. Then the government in the first week of January this year decided to scrap the licences of all firms for digging petroleum in Nepal. The company had held the licence for 16 years through four-year contracts. However, Texana is communicating with the PEPP and the government has not blacklisted the company yet.

As per Sapkota, the remaining two firms are out of contact. Both BBB Champion and EABG had obtained their licence in 2012.

PEPP has divided the Tarai and the Siwalik hills into 10 exploration blocks of 5,000 sq km each as being potential oil fields.
 
Source: THT