Oil drilling in 2011

30 July 2010 02:43 pm - 23 - {{hitsCtrl.values.hits}}

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By Sandun A. Jayasekera

Cairn Sri Lanka (Pvt) Ltd a subsidiary of Cairn India (Pvt. Ltd) will begin drilling the first three oil wells in the Mannar Basin in January, the Petroleum Ministry said today.

Petroleum Resources Minister Susil Premajayantha said Cairn Sri Lanka was calling for bidders globally to undertake sub contracts for the eight-year three-stage oil exploration project, which is estimated to cost of US$172 million or Rs.18 billion.

The Minister said Cairn (India) had conducted three-dimensional seismic surveys and based on the results were now able to begin the drilling in the Mannar Basin. Cairn Sri Lanka will use its parent company know how, machinery and manpower for the excavation of test wells off Jaffna.

Minister Premajayantha said the Petroleum Resources Development Committee (PRDC) on behalf of Sri Lanka had signed six contractual agreements with Cairn Sri Lanka. The Indian company had paid a signature bonus of US$ One million for each contract which deals with current movements, seismic survey, data processing and structural evolution.

“The government has been successful in its tender procedure whereas the Indian company has consented to go for oil exploration in block SL 2007-01-001 in the Mannar Basin on very generous terms. Under the tender agreement Cairn Sri Lanka will pay US$50 million when the oil production resumes at the end of successful oil exploration. The royalty payable by the Indian company to Sri Lanka on the total production is 15 per cent in addition to the local taxes on their income. The Indians must also purchase 15 per cent of the shares of the National Oil Company that will be formed after the last phase of the project.

The agreement that runs for eight years has been planned in such a way that Sri Lanka will gradually enhance its royalty until the full ownership of the oil production is reached,” Minister Premajayantha said.

“In the first part of the bidding in 2007, Sri Lanka offered three blocks -- C1, C2 and C3 in the Mannar Basin when it called for international tenders after an international road show. Cairns (India) won a bid as the only Indian company able to meet the conditions of the tender and asked for block C2,” the minister said.

He said five blocks in the Mannar Basin -- M1, M2, M3, M4 and M5 situated off the North West coast have been lined up for this year’s international tenders.

“The decision on conducting an international road show will be taken at the next ‘Petroleum Resources Development Committee’ meeting.

Sri Lanka has identified and demarcated 12 blocks -- three in the Cauvery Basin (off North East coasts of Sri Lanka), eight in the Mannar Basin (off Western and North Western Coasts) and one in the Southern Basin (off Hambanthota) for oil exploration and will call for international tenders for all blocks except M2.

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Comments - 23

Mathan Friday, 30 July 2010 06:08 PM

We will loose the fish due to changes in the ecology of our sea bed. We have billions of rupees worth of sunny beaches, but are looking for 'quick' money.

Shovini Saturday, 31 July 2010 08:19 AM

Very interested to know into whose pockets go all the getshefty commissions.

bernard Saturday, 31 July 2010 07:24 AM

This is the begining of destruction of Sri Lanka's coast and sea life.

adam Friday, 30 July 2010 10:03 PM

- We lack home-grown technical staff, for these kinds of jobs. So, first of all, at least, set-up an academy to train our locals - the CPC, NAB or University is not doing this at the moment!

firoz Friday, 30 July 2010 09:38 PM

If anything, this will only make those in power more arrogant.

Gamunu Wijesinghe Friday, 30 July 2010 09:10 PM

Try to be optimistic for the sake of Sri Lanka!

Shyam Silva Friday, 30 July 2010 08:58 PM

Do not worry about oil leaks. This drilling will be in shallow waters.

Shyam Silva Friday, 30 July 2010 08:54 PM

Don't be critical of development. Sri Lanka is losing nothing, but gaining, with oil exploration.

nizam Friday, 30 July 2010 07:54 PM

Well said Ram!

nizam Friday, 30 July 2010 07:52 PM

Does anyone think that this resource will bring any benefit to the ordinary man?

ram Friday, 30 July 2010 07:41 PM

Singapore has no natural resourcese but it managed to improve itself by good governance! Sri Lanka has better human resources than any other South Asian country, but it needs a better set of rulers! Many African countries did find oil, but this didn't make their people any wealthier. It only made their rulers wealthy!

Saradial Friday, 30 July 2010 06:54 PM

Hope for the best!

Sanka Chandima-SLGA Friday, 30 July 2010 03:23 PM

what is the assurence of free from gulf oil spill in our seas,..

citizen1 Friday, 30 July 2010 04:50 PM

The most hideous venture under the current circumstances.
How about relieving the poverty stricken citizens and those laid off work instead.

Imthiyas Friday, 30 July 2010 04:41 PM

Good Luck Sri Lanka for a better future!!!

Ajith Friday, 30 July 2010 04:30 PM

Good luck Sri Lanka. Hope everything ll have a successful ending.

Akilan Friday, 30 July 2010 04:24 PM

Now we know wht India supported our War on Terror. Let China and India dig all our resources that we all will become beggers on the street.

Dilan Friday, 30 July 2010 04:15 PM

It will take 20 years to even produce this oil, and even then, it will be a drop in the ocean compared to what is required. What a waste of money.

Tharaka Chanaka Friday, 30 July 2010 04:14 PM

oil prices up on Jan 2011...

SL Friday, 30 July 2010 04:07 PM

There are no such assurances. You take your best practice and hope for the best. No risk no gain......

I Hussein Friday, 30 July 2010 03:32 PM

I am very sceptical about this Indian involment. Will they do the right thing?
Also wonder if its successful how much income from this will really go to country's sake.

Lankanlion Friday, 30 July 2010 03:31 PM

I don't expect any benefit from this oil resource to ordinary Sri Lankan. Rather benefit will be robed by rulers and their goons. Sri Lankans remain as ever before..fighting for a square meal

Babanis Friday, 30 July 2010 03:31 PM

Again! Suba Anagathayake

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Oil drilling in 2011

Comments - 23

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