New Delhi, Aug 24 (IANS): The atmosphere of mistrust between India and Nepal over border issues has not impacted energy sector cooperation between the two countries as both have decided to explore the possibility of another petroleum pipeline to feed the growing fuel demand in the Himalayan nation.

The existing Motihari-Amlekhgunj petroleum products pipeline has become the lifeline for Nepal for meeting its energy needs. The two sides are now exploring whether state-owned Indian Oil Corporation could look at another product pipeline running into the northern and eastern parts of the country.

The discussion on extending the network of petroleum pipeline and setting up new pipelines was discussed during the meeting of a joint working group early this month. The meeting organised through video conferencing was attended by top government officials from the Indian side including representatives from IndianOil, GAIL, and HPCL.

The Nepalese side was represented by the Ministries of Finance and Foreign Affairs of Nepal and Nepal Oil Corporation (NOC).

"A team of officials would soon visit Nepal to explore the possible routes for a new product pipeline. This would be followed by establishing feasibility studies before investment decisions are worked out. There is potential for expanding the pipeline network that would bring a lot of savings for the Himalayan country," said an official of a public sector oil company asking not to be named.

The existing pipeline between the two countries was inaugurated in September last year by the Prime Ministers of India and Nepal. The 69-km pipeline, which starts from Motihari in India and ends at Amlekhgunj in Nepal, is the first of its kind in south Asia.

Indian Oil Corporation Ltd, India's largest refiner, built the pipeline, with an investment of over Rs 324 crore, in collaboration with Nepal Oil Corporation Ltd, fulfilling the commitment made under an MoU signed in August 2014.

Before the opening of the pipeline, petroleum products were being transported from India to Nepal by tankers/trucks at 13 pick-up points (7 for products and 6 for LPG). The Raxaul-Birgunj was the most important trade point between the two countries but the pipeline has reduced the movement of tanker trucks from these points to consumption centres in Nepal.

The JWG also discussed a larger role for India in building oil production storage capacities in Nepal. It is envisaged that Indian and Nepalese companies may cooperate towards this end as well.