Nepal’s energy future looks promising following the discovery of a vast reserve of methane gas in Dailekh, which could significantly reduce the country’s reliance on imported fossil fuels and ease pressure on foreign exchange reserves.

A preliminary study has revealed an estimated 112 billion cubic meters of natural gas in the Jaljale area of Dailekh. Experts believe that if extracted and utilized efficiently, this reserve could meet Nepal’s domestic demand for cooking gas for the next 50 years, marking a milestone in the country’s quest for energy self-reliance.

The discovery, confirmed by a six-year study conducted by the China Geological Survey at an investment of 113 million RMB (approximately Rs 2.17 billion), is being hailed as a significant breakthrough in Nepal’s energy exploration efforts. The survey has also identified potential gas deposits in Dang, Palpa, and Sunsari, with a combined estimated reserve of 430 billion cubic meters.

Nepal currently spends a large portion of its national budget on petroleum imports. In the first 11 months of the current fiscal year alone, the country imported petroleum products worth Rs 294 billion - including petrol, diesel, liquefied petroleum gas (LPG), aviation fuel, and kerosene. In FY 2023/24 and FY 2022/23, fuel import bills stood at Rs 337.34 billion and Rs 352.68 billion, respectively. Specifically, Rs 55.61 billion was spent last fiscal year on importing 524,204 tons of LPG, underscoring the potential savings if domestic methane is harnessed.

Methane - the primary component of natural gas - is a clean-burning, versatile fuel. It is widely used for cooking, heating, electricity generation, and powering vehicles in the form of compressed or liquefied natural gas (CNG/LNG). Industries also use methane as a raw material for producing chemicals such as hydrogen, methanol, and ammonia, which are crucial for fertilizer production.

If properly managed, the Dailekh methane reserve, experts say, could yield multiple long-term benefits for Nepal. It would reduce the country’s dependence on imported fossil fuels, easing pressure on foreign currency reserves and helping to narrow the persistent trade deficit. A stable domestic supply of fuel would also strengthen Nepal’s energy security, especially during global crises or supply chain disruptions caused by events such as major conflict.

The availability of methane as a raw material could promote industrial growth, particularly in fertilizer and chemical production. Moreover, it could encourage a transition to cleaner energy sources by promoting the use of compressed or liquefied natural gas (CNG/LNG) in transportation and electricity generation. Additionally, the development of gas infrastructure in resource-rich regions would boost local employment and drive regional development.

Energy experts say that developing the newly found reserves could transform Nepal’s energy landscape. “This is a historic achievement,” said Shiva Ghimire, President of the Nepal LP Gas Industry Association. “However, realizing its full potential depends on the management of extraction, infrastructure development, and economic viability based on the quality and cost of the fuel.”

Ghimire emphasized that utilizing local fuel sources could significantly reduce Nepal’s import bills, which account for nearly 18 percent of total imports annually. “The long-term strategic impact of this development could be huge - provided we approach it with sound policy and investment,” he said.

With the potential to become a game-changer for Nepal’s energy independence, the government is now under pressure to move swiftly with feasibility studies, investment frameworks, and extraction strategies to convert this discovery into real economic gains.

By Rajesh Khanal