Under the terms of the agreement, Cairn will explore the Dhangadi region of the far west, the Karnali region of the mid-west, the Lumbini area of the western region and the Birgunj and Malangwa areas of the central region of Nepal. Cairn has to complete its operations within four years but the contract has allowances which allow the firm to extend the contract in two two-year stints.
Cairn will also pay rent to the government to the tune of US$250,000 per year.
In a statement Nepal’s Chief of the Petroleum Exploration Division of the Department of Mines and Geology within the Ministry of Industry, Commerce and Supplies, Bharat Gyawali said, “[Cairn] have come after studying the geological database thoroughly. They have come on their own and they may not have done so without seeing any prospects. They wouldn’t have wanted to invest so much at such a time here if they hadn’t.”
“The government will not have to pay for the activities if they do not make a finding. If indeed they do make a finding, it is going to do wonders. It is going to provide a lot of returns,” added Gyawali.
According to Cairn Director Michael John Watts, “[Cairn will] submit a detailed project report to the government within 30 days and set up [our] offices in Nepal within 90 days and start exploration activities.”