Oil exploration in east Nepal: BBB Champions Oil comes to town

A Sunflower farm in eastern Terai's Sunsari district. The region depends heavily on agriculture. Photo: Kashish Das Shrestha

A Sunflower farm in eastern Terai’s Sunsari district. The region depends heavily on agriculture and falls inside Block 9 of the Petroleum Exploration Promotion Project, currently leased out by BBB Champions Oil Company. Photo: Kashish Das Shrestha

New York. By late 2013, the world will know if Eastern Nepal will be one of the world’s newest oil reserves prime for extraction. At least that is the ambitious and confident timeline set by Mr Gary Bergholotz, the CEO of BBB Champions Oil Company, based in Houston, Texas. As per the decision of Nepal government on August 28, his company has been awarded Block#10 for oil and gas exploration, while Blocks 8 and 9 were awarded to a partnership of Champions Oil and Emirates Associated Business Group (EABG). In a few days, he is expected to spend time in Nepal meeting with officials related to the project. In a phone conversation last week, two days after his project in Nepal was finalized, Mr Bergholotz spoke of his company’s hopes and expectations for Nepal, and why he thinks they will succeed where others have failed.

Revisiting Block #10:

Almost one third of the Nepal has been plotted out for oil exploration. Currently all 10 blocks have been leased out to foreign companies. Map Credit: Petroleum Exploration Promotion Project, Nepal.

Almost one third of the Nepal has been plotted out for oil exploration. Currently all 10 blocks have been leased out to foreign companies. Map Credit: Petroleum Exploration Promotion Project, Nepal.

When the government decided to open up the country for oil exploration in the mid 1980s, Nepal’s entire southern belt was divided into 10 exploration blocks. Currently, the Scottish company Cairn owns blocks 1, 2, 4, 6 and 7, while the US company Texana, also based in Houston, owns blocks 3 and 5.

Ironically, Block #10, Biratnagar, was the first exploration block to be leased out in 1986 to a Shell and Triton partnership. The project was abandoned when the companies concluded there was no oil there, though Nepali officials claim they just did not drill deep enough.

Farmers harvest their crops in Biratnager, or Block 10 of the Petroleum Exploration Promotion Project. Photo: Kashish Das Shrestha

Farmers harvest their crops in Biratnager, or Block 10 of the Petroleum Exploration Promotion Project. Photo: Kashish Das Shrestha

Now, 26 years later, it is the last block to be leased out, and one that seems to bear promise.

Mr. Bergholotz explained that technology has come a long way since the last time anyone went to explore for oil in Nepal’s eastern blocks. And he is confident the technology that his company has will delivers successfully. In the meantime, his company is also working to purchase seismic data from Texana, which has been in Nepal since 1998.

The Champions timeline:
BBB Champions Oil Company first entered into talks with the Nepali Government in mid-2010. The deal was approved in July this year and finalized only last week. At a time when both Cairn and Texana have declared force majeure and entered self-imposed suspension of work in Nepal, Champions plans to waste no time. The company aims to conduct seismic studies by early 2013, and begin drilling for exploration by late 2013.

Before partnering in Nepal, Champions had been working with EABG in Syria since 2008. Since then, the partnership has moved into Africa. Currently, Nepal is the only country in Asia they are working in.

The contract:
In the phone conversation last week, Mr. Bergholotz made it clear that the contract between his company and the Government of Nepal was designed to make the partnership efficient. He also explained that it was drafted completely fresh for this deal in particular.

The contracts signed by Texana in 1998 and Cairn in 2004, however, appear to be identical, tweaked only to identify the companies and the blocks they own. They have also been kept confidential. It is unclear if the contract signed by Champions Oil and the Nepali Government will be made accessible to journalists, community groups and other stakeholders.

More than oil; water for air:
Champions CEO Bergholotz also repeatedly expressed commitment to bringing to Nepal not just the technology to extract oil but also domestic job opportunities. When asked about how oil exploration could affect the region’s agriculture sector, he explained that Champions Oil maintains an agriculture technology portfolio and the company is keen on sharing it in Nepal.

“Pick the exact location where you would like to put the project into effect, and allow us to set in motion our method of pulling humidity from the air into your storage tanks. We do not need water from a well, an aquifer or from the water system, we make our own water each day!” the company’s brochure announces. “Our combination of cutting-edge technologies allows us to grow an oasis anywhere in the desert!”

A red text box in the company’s brochure reads: “Utilizing The Latest Advances In Agricultural Technology, such as designer seed and plant production, along with eco-friendly materials, our associated companies are able to bring vegetation to life in arid climates. Together with the latest farming technologies and expert management, fruits and vegetables are made available to regions of the world where farming has been problematic.”

Blocked out:

Nepal’s 10 oil exploration blocks cover the country’s entire Terai region. When the project was conceived with the help of the World Bank in 1982, Nepal was a kingdom ruled by a monarchy. Today, monarchy has been abolished for some years and the country is marching towards becoming a federal democratic republic. Enormous socio-economic and political transformations have swept through, and transformed, the country in infinite ways. Yet it appears that not a single public discourse has been held with local stakeholders on a project of this magnitude: one that affects about a third of the country’s physical territory, its entire breadbasket, and its critical biodiversity hotspots.

With Cairn and Texana still suspending their operations, Blocks 8-10 hold the most potential for any immediate exploration work to begin. Should drillings for exploration and extraction become a reality in Block 10, as Champions Oil is confident it will, how may locals respond to the potential disruptions or damages that may come along to cemeteries in the area, and the forests those sites are in? How may any further loss of forests in the region affect the already dangerous monsoon floods there, and across the border in India, and farmlands on both sides?

Many unanswered questions remain in regard to Nepal’s oil exploration endeavors. And unlike Texana and Cairn, for now Champions Oil seems open to the idea of discussing their work publicly. For Mr. Bergholotz, it’s a simple matter of his company finding and extracting the oil in a way that also ‘benefits’ the local community. To what extent Champions is able to maintain their openness and stay confident about their Nepal project will be seen down the road. But as of last week, for the first time since the mid-1980s when Nepal began to actively seek foreign companies to explore for oil in its territory, all of the 10 blocks have been leased out. And as the two veterans in this game stand on the sidelines, only the latest player – BBB Champions Oil – seems bent on winning it.

Part 2 of the Oil Exploration in Nepal series, as published (September 7, 2012) in Republica national daily. Read Part 1 here.