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Cairn to exit Lankan oil explorations end of this month

14 October 2015 04:32 am - 0     - {{hitsCtrl.values.hits}}

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Oil exploration company, Cairn India, a unit of Indian business tycoon Anil Agarwal’s Vedanta group, is to relinquish its exploration rights in Sri Lanka’s Mannar basin end of this month. 

Bloomberg wire quoted 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 UUS $ 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. 

“We are at an advantage because we have all the data collected by them,” Weerakkody told Bloomberg. 

He also said Sri Lanka would go for a fresh international tender for offshore oil and gas blocks.

“…we will go forward with the next step. We are going to expedite the international tender process.”

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.

“All the top oil companies believe that Sri Lanka is blessed with gas and oil,” Weerakkody said, adding that the government hadn’t considered offering incentives for exploration. 

According to Weerakkody, Total SA, Europe’s third-largest explorer is seeking a joint study in two blocks on Sri Lanka’s eastern front. Two other companies were also interested in conducting seismic studies in the island’s northern belt, he said without naming them.
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 Singapre.

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.
 
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