Announcing its second quarter results to the Bombay Stock Exchange, Cairn India officially expressed its intention to exit Sri Lankan oil exploration activities.
“We have submitted the requisite closure documents to Petroleum Resources Development Secretariat (PRDS), the regulatory authority for petroleum resources in Sri Lanka. The review is under process and is expected to be closed in October 2015,” the notes attached to the interim financial accounts of Cairn India said.
Bloomberg wire recently quoted Sri Lanka’s Petroleum Resources Management Minister Chandima Weerakkody as saying Cairn would be “departing in a couple of weeks,” after an agreement with the Sri Lankan government.
He was quoted as saying that Sri Lanka would keep Cairn’s seismic study worth about US $ 300 million and wouldn’t charge any penalty for pulling out.
It is believed that termination of the agreement has been prompted Cairn India’s decision to refrain from going ahead with further exploration in Sri Lanka, after drilling four wells, three in 2011 and one in 2013.
Natural gas was discovered in two wells, which were estimated to have the recoverable volume of around 60 billion cubic metres.
Cairn Lanka, the fully owned subsidiary of Cairn India is estimated to have spent US $ 215 million for the exploration.
Minister Weerakkody also said Sri Lanka would go for a fresh international tender for offshore oil and gas blocks.
In July, the interim government’s Cabinet approved inviting new international bids for commercial development of natural gas deposits found in the Mannar basin block.
Sri Lanka however officially launched its second international licensing round in the early part of 2013, where road shows were conducted in the UK, the USA and Singapore.
However, the response remained lukewarm as only two companies from India and Singapore submitted bids for 3 blocks out of the 13 that were on offer. Yet, these bids were never awarded.