The Oil Factor: Texana in Nepal

Revolutionary Worker #1154, June 9, 2002, posted at

Since it began in 1996, the People's War in Nepal has steadily gained popular support among millions of poor peasants in the countryside. The corrupt and reactionary Nepalese government has been in constant turmoil, fraught with infighting, over how to crush the Maoists who now control huge areas in the countryside.

India has been sending truckloads of weapons across the border to help the Nepalese Royal Army carry out a murderous "search and destroy" campaign against the Maoist guerrillas. The Nepalese government has officially branded Maoists in Nepal "terrorists." And the sweeping logic of the "global war on terrorism" has provided a backdrop for increasing U.S. involvement in Nepal.

The United States and India fear the regional repercussions of a successful Maoist revolution in Nepal. The People's War in Nepal directly threatens India's economic and political domination over Nepal. Maoist guerrillas in India, who have fraternal relations with the Maoists in Nepal, are waging armed struggle against the Indian government. For the U.S. and India, the revolution in Nepal raises an awful specter of mass upheaval in the region and loss of control.

In January, Colin Powell went to Kathmandu to meet with Nepal's Prime Minister, King Gyanendra, and generals of the Royal Nepalese Army. In May, Nepal's Prime Minister flew to Washington, D.C. to meet with George W. Bush. The U.S. Congress promised $20 million in military aid to help the Nepalese government fight the Maoists.

A little known factor in all this is the search for oil in Nepal.


Nepal is a country that currently produces no oil. It uses only about 12,000 barrels per day, but oil consumption in the country is growing rapidly. All oil products (i.e., kerosene, diesel, jet fuel, gasoline) are imported, largely from India.

In January of 1997, the Nepalese government announced it would accept international bids for the right to conduct oil surveys in ten "exploration blocks" in the country. Numerous initial studies had been done in the Terai area--the flat plain lands along the southern border with India--indicating the potential for profitable extraction of oil.

This was not the first time the Nepalese government had invited foreign companies to hunt for oil in Nepal. Shell Nepal had carried out exploration in the southern area of Biratnagar from 1986 to 1990 and had even drilled an exploratory well. But there had not been any serious exploration for oil in Nepal by a foreign company in 10 years.

In December 1998, Texana Resources Company (TRC) bid and won the right to search for oil in Nepal.

The U.S./Texas-based company's plan was to carry out seismic surveys in the middle region of Nepal along the southern border--in Nepalgunj and Chitwan. Texana established offices at the two sites and began initial assessments. Then in November 1999, Texana invited bids from international petroleum exploration companies to help carry out seismic surveys in these two "petroleum blocks."

India has a long history of dominating Nepal, both economically and politically. So, from a capitalist/imperialist point of view, it made perfect sense to get India in on the Texana oil project. The two areas of exploration were right across the border from India--close to two other blocks of land in India where oil exploration was being carried out by the Indian company, Oil and Natural Gas Corporation (ONGC).

The Financial Express reported that ONGC was moving to acquire a 50 percent share in the Texana project in Nepal. A senior government official in New Delhi was quoted as saying that the two exploration blocks in Nepal were of "strategic importance."

But the immediate prospects of oil profits were not the only motivation for the U.S. and India to pursue the exploration of oil in Nepal. Texana and the ONGC were not even sure the hunt for oil in Nepal would be successful and highly profitable. But they wanted to deny other countries even the possibility of controlling any oil resources found in Nepal.

The Indian magazine Outlook commented, "A joint venture will help U.S. companies understand the difficult terrain. And secondly, it will help U.S. oil majors stave off rival interests."

In fact, petroleum companies in China and Pakistan had also shown interest in participating in Texana's exploration for oil in Nepal. According to an Indian official, "Two Chinese companies, China National Star Petroleum Company and National Oil and Gas Company, besides Pakistan's Oil and Gas Development Corporation had also expressed their interest to collaborate with Texana Resources for oil exploration in these areas."

Pakistan and China, India's regional rivals, might want an opportunity to set up an enterprise right near India's northern border. But Texana seems to be facilitating and ensuring that any discovery of oil in Nepal will be eventually added to India's ledger of economic domination of Nepal.

According to Indian officials, Texana has agreed to eventually transfer operatorship rights for the two blocks of land in Nepal to India's Oil and Natural Gas Corporation. One official explained, "The blocks 3 and 5 of the Terai region of Nepal (awarded to Texana) are close to the two blocks of the IOC- ONGC combine in the Ganga basin and, therefore, once the operatorship is effected, it is in the interest of ONGC that it handles the operatorship of all these blocks and achieve synergy and cost savings."

Texana president Max Mazy is quoted saying, "Texana will conduct detailed exploration, including seismic work to further define drilling locations...We have high hopes and strong indications that the potential exists for world-class hydrocarbon resources in Nepal."

Indian sources also said that after any discovery of oil and gas, ONGC would have the right to export oil and build a pipeline if required.

In March 2000, a U.S.-government-sponsored conference was held in Kathmandu, Nepal's capital, to address the question of how to help U.S. companies tap into the growing South Asian energy sector. This was one indication that the U.S. saw Nepal as one of the countries in South Asia where there was the potential for new oil profits.

The conference, "Energy South Asia," provided U.S. companies with details on planned projects worth billions of dollars in the areas of oil and gas, refining, and petrochemicals, as well as other energy forms, in what is seen as one of the world's largest markets.

The conference was presented by the U.S. Trade and Development Agency (TDA) and co-sponsored by the U.S. Departments of Energy, Commerce, and State, and the Agency for International Development and covered "energy opportunities" in Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka. Participants included representatives from the World Bank, the International Finance Corporation, the Export-Import Bank, the Overseas Private Investment Corporation, and the Asian Development Bank. J. Joseph Grandmaison, TDA's Director said of the conference, "This is an unprecedented opportunity for U.S. companies to capture a larger share of the energy projects in South Asia."

James Baker's Secret Trip

Some might wonder: How does the Texana/ONGC hunt for oil in Nepal fit into the larger geo-strategic interests of U.S. imperialism?

A secret trip to New Delhi helps to shed some light on this question.

James Baker was the U.S. Secretary of State under George Bush (Sr.) and now said to be a close confidant and key strategist for Bush Jr. He's a Texan oilman.

Reportedly, when James Baker visited New Delhi in April 2002, only a few dozen people in India knew about his trip.

According to the Indian magazine Outlook, western diplomatic sources confirmed that during the closely guarded visit, Baker met senior officials of the Prime Minister's Office, and the external affairs and petroleum ministries. The agenda was three-pronged: (1) Lobby New Delhi to support Washington's plan to attack Iraq; (2) Persuade Reliance Petroleum and the Oil and Natural Gas Corporation (ONGC) to drop their exploration and production plans in Iraq; and (3) Persuade ONGC to partner a U.S. energy company exploring two sites in Nepal.

The U.S. has been putting pressure on countries throughout the Middle East and South Asian region to support its plans to attack Iraq. And the United States considers it a problem that India has maintained friendly business and trade ties with Iraq.

India buys a significant amount of oil from Iraq and it is also the largest exporter of electrical equipment to Iraq. Of $750 million Iraq spent on its electrical needs in the last three years, almost half of this was purchased from India. And such exports from India to Iraq could drastically increase. After September 11, Iraq's minister for commission of electricity, Sahbaan Mahjoob, visited India and indicated that Indian exports could be upped to $700 million in the next two years.

Outlook magazine quoted a senior Western diplomatic source saying, "India's increased business with Iraq is an area of discomfort."

James Baker reportedly made a presentation to India's petroleum minister Ram Naik and heads of state-owned oil and gas companies. Outlook quotes a top western diplomatic source saying, "The basic idea was to dissuade Indian companies from investing in Iraq... Investments to the tune of $600 million have been planned by ONGC and Reliance for Iraq."

A senior petroleum ministry official in India reported that: "Mr. Baker also exhorted Indian companies to join hands with American oil majors for explorations in Nepal."


Sometimes it looks like oil is behind everything the U.S. is doing around the world. One doesn't have to dig very deep to find the "oil factor" in the war on Iraq, the war on Afghanistan, U.S. involvement in Indonesia, the Philippines, etc. etc.

The ledger of the U.S. empire is more than dollars and cents, bigger than X number of oil wells. The U.S. has strategic interests in controlling parts of the world, even where oil is not a major factor. And even where oil investments are large, this is not the only motivation for asserting U.S. power. The U.S. strives for domination over certain parts of the world in order to deny its rivals access to those regions. The U.S. "war on terrorism" is aimed at restructuring regimes, power relations, and domination on a global scale.

Larger geo-strategic interests are behind the increasing U.S. involvement in Nepal. India, backed by the U.S., seeks to maintain Nepal as a neocolony. And India and the U.S. both have an interest in crushing a popular insurgency that threatens the stability of the whole region. But within all this, there is an "oil factor."

It is not clear how successful the Texana project will be in Nepal. If U.S. imperialism has its way, any oil found in Nepal will put profits in the pockets of U.S. and Indian companies--and further the domination of India over Nepal. But a successful People's War that overthrows the Nepalese government and kicks out foreign exploiters would put an end to any such capitalist dreams.

This article is posted in English and Spanish on Revolutionary Worker Online
Write: Box 3486, Merchandise Mart, Chicago, IL 60654
Phone: 773-227-4066 Fax: 773-227-4497
(The RW Online does not currently communicate via email.)