India, Nepal renew petroleum supply agreement

India and Nepal have signed an agreement to renew supply of petroleum to Nepal for a period of five years i.e. till 2022.
The renewed agreement, which was overseen by the Petroleum Ministers of both countries, was signed even as both sides pledged to build a new pipeline for LPG.

Key Facts
  • The agreement was signed between Indian Oil Corporation Ltd. (IOCL) and Nepal Oil Company (NOC) and was overseen by Petroleum Ministers of both countries.
  • The renewed agreement is an umbrella document between the two countries detailing the continued supply of petroleum, oil and lubricant products.
  • It also puts in place an institutional mechanism for cooperation in the areas of additional services and technical assistance between the two countries.
  • Under it IOC will supply about 1.3 million tonnes of fuel annually to Nepal with a promise to double the volume by 2020.

Indian Oil has been supplying petroleum and petroleum products to Nepal since 1974. The renewing of the agreement is considered India’s continued support to Nepal in meeting its complete hydrocarbon requirement. It has pledged to continue supplies, though petroleum supply to Nepal was severely hit during 2015-16 due to the blockade on the border. Thus, the new agreement also maintains the fuel supply exclusivity to India. 

Motihari-Amlekhgunj Pipeline
  • Both countries are also working to further deepen engagement in the oil and gas sector, including construction of petroleum product Motihari-Amlekhgunj Pipeline.
  • Once the pipeline completed, it will further ensure continuous and uninterrupted supply of products to Nepal.
  • India also agreed to extend the proposed Raxaul-Amlekhganj product pipeline to Chitwan and to start work on the pipeline in 2017-18.



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