Sri Lanka to Offer More Blocks for Oil Exploration in the Island's North-East and South

11th December 2009, www.lankabusinessonline.com

Sri Lanka is ready to calls for bids for oil exploration in more blocks in the island's north-west as well as the south, Petroleum Resources Minister A H M Fowzie said.

He said he expects more interest this time now that the ethnic war is over and Cairn India has begun seismic surveys in preparation for drilling test wells in the Gulf of Mannar off the island's north-west.

The petroleum ministry has submitted a proposal to the Cabinet of ministers seeking approval to call for oil exploration bids in three more blocks, he told a news conference held to announce Cairn's launch of seismic surveys.

"Very soon we'll call for tenders for more blocks in the Mannar Basin," he said.

"The last time the war was on and the LTTE (Liberation Tigers of Tamil Eelam separatists) were operating in the area. So it was very risky. But now we expect more interest."

Sri Lanka's invitation for bids to explore for oil in the Mannar Basin last year drew only a limited response.

But government forces defeated the Tamil Tigers in May this year, ending a 30-year ethnic war, and raising expectations of a revival in foreign investment.

Cairn India which won exploration rights to one block in the Mannar Basin in the first bid round has said it plans to invest 100 million dollars in the effort.

Fowzie said oil and gas discoveries on the Indian side of the Mannar Basin meant there was a better chance of finding similar deposits on the Sri Lankan side.

Fowzie said he was disappointed that neither India nor China which had been offered a block each in the Gulf of Mannar free of charge had shown interest in exploration.

The Indian government was offered block number one and China block number eight in the Gulf of Mannar.

"India wanted block number two which was given on tender to Cairn which we refused. Now there's a possibility of Cairn India talking to the Indian government and starting exploration in block number one as well.

Fowzie also said his ministry has sought Cabinet approval to call for oil exploration bids in the island's south where he said studies had shown hydrocarbon potential.

"Studies done in the southern province have shown indications of deposits of hydro carbon. I have submitted a Cabinet paper for approval to call for bids."