The Petroleum Exploration and Promotion Project was established in 1982 (2039 B.S.) under the Department of Mines and Geology with the objective of advancing petroleum and natural gas exploration in Nepal in a systematic and scientific manner. Since its establishment, the Project has been engaged in the collection, analysis, and continuous updating of geological, geophysical, and geochemical data through both internal resources and international technical cooperation. These efforts have led to the preparation of comprehensive data packages to support petroleum exploration and promotional activities.

In accordance with the prevailing legal framework, the Project regularly publishes notices and promotes petroleum exploration opportunities to international oil and gas companies, encouraging their participation in exploration activities within Nepal. Nepal"s geological setting and tectonic history show strong similarities to the petroleum-producing regions of Assam in eastern India and the Potwar Basin in western Pakistan, where hydrocarbon production has been ongoing for decades. Evidence of petroleum potential in Nepal is further supported by surface oil seepages and continuously burning natural gas flames observed in areas such as Padukasthan, Sirsthan, and Navisthan in Dailekh District. Additionally, the presence of suitable sedimentary rock formations in the Terai and Chure regions indicates favorable conditions for hydrocarbon generation and accumulation.

Formal petroleum exploration in Nepal began in 1979 (2036 B.S.) with an aeromagnetic survey covering approximately 48,000 square kilometers of the southern part of the country, conducted with technical assistance from the World Bank. The results of this survey identified several subsurface geological structures with hydrocarbon potential, leading to the implementation of further detailed exploration programs. Between 1982 and 1984 (B.S. 2039-2041), 1,251 line kilometers of seismic surveys were completed with World Bank support through the French company CGG. This was followed by the preparation of photogeological maps covering about 60,000 square kilometers of the Terai, Chure, and parts of the Mahabharat Range during 1984-1985 (B.S. 2041-2042), with technical assistance from a UK-based company.

Integrated geological, geophysical, and geochemical studies carried out by the Project have identified promising hydrocarbon potential in the Terai and Chure regions of southern Nepal. Accordingly, an area of approximately 50,000 square kilometers has been delineated and subdivided into ten exploration blocks, each covering about 5,000 square kilometers. In line with the Petroleum Act and Petroleum Regulations, these blocks are periodically offered for petroleum exploration through international competitive bidding, facilitating exploration activities by international oil and gas companies.

The Project has published colored geological maps of all ten exploration blocks at a scale of 1:250,000 and has prepared a comprehensive Data Sales Package incorporating geological, geophysical, geochemical, and drilling data collected from various exploration programs. International oil companies regularly access the Project"s Data Center to review and purchase relevant datasets in response to bid announcements. To date, petroleum-related activities have generated a total revenue of USD 2,060,553 for the Government of Nepal through data sales, surface rental fees, and other charges.

All activities of the Petroleum Exploration and Promotion Project are carried out in accordance with the Petroleum Act, 1983 (2040 B.S.), the Petroleum Regulations, 1985 (2041 B.S.), and the Petroleum (Income Tax) Regulations, 1985 (2041 B.S.).