By Chandeepa Wettasinghe
A national gas policy would be required to effectively market Sri Lanka’s offshore hydrocarbon fields to potential players, according to a top official of Sri Lanka’s state-controlled oil exploration agency.
“The gas policy is essential, as we cannot market the blocks without it,” Petroleum Resource Development Secretariat (PRDS) Director General Saliya Wickramasuriya said in a recent interview with Upstream, a widely read oil and gas industry newspaper.
Quoting industry experts, Upstream noted that a gas policy would increase the credibility and attractiveness of the Sri Lankan oil and gas industry.
Cairn Lanka, a subsidiary of Cairn India, struck gas on October, 2011 in a well they dug in Sri Lanka’s Mannar basin. The initial discovery was followed by another in November. But the gas fields are yet to be developed.
Wickramasuriya told a recent forum in Colombo that Cairn had expressed its intention to withdraw from Sri Lanka to focus on their Rajasthan oil fields.
Sri Lanka’s Petroleum Minister stated that they were actively looking for partners to develop and commercialize the gas fields discovered.
Cairn India incurred a US $ 80 million impairment loss originating from its oil exploration activities in Sri Lanka, its fourth quarter results showed.
Meanwhile, Sri Lanka’s second round of bidding for 13 blocks in Mannar and Cauvery basins had drawn just three bids by Calgary-based Bona Vista Energy and Cairn India, which have yet to be awarded.
Wickramasuriya expressed disappointment over the results but said it was a learning experience, and that it gave Sri Lanka some exposure in the international arena.
He added that seismic data, the lack of which had also caused setbacks during the bidding process, would be gathered following Cabinet approval, as compelling proposals were received from leading international companies. “We are hoping that with the new government in place, the process of awarding two offshore blocks from the bid round, Cairn’s conditional gas purchase agreement, the gathering of speculative seismic data and shaping up of the new Petroleum Bill would start to gather pace,” Wickramasuriya was quoted as saying.
Quoting unnamed industry sources, Upstream said the lack of interest during the 2013 bidding round was due to the previous regime’s desire to have more Chinese involvement in the country.
Meanwhile, the draft Petroleum Bill which has clearly defined the powers and functions of each stakeholder and make the approval processes simpler could be approved by the Cabinet soon.
Industry sources had told Upstream that the previous regime had completely ignored the Bill which would provide stability in contracts and protection for investors.