THE ECONOMIC IMPORTANCE OF THE NORTH-EAST OF SRI LANKA
Posted on May 24th, 2016

KAMALIKA PIERIS

Several valuable economic resources of Sri Lanka are found only in the    Northern, Northwestern and Eastern Provinces. These will not be available to the rest of the country once Eelam is established. However,  Article 25 of   the United Nations International Covenant on Economic, Social and Cultural Right  says  ‘nothing in the present Covenant shall be interpreted as impairing the inherent right of all peoples to enjoy and utilize fully and freely their natural wealth and resources.

The oil and gas reserves of Sri Lanka are available mainly in the north-west and east of Sri Lanka.

There is potential for both onshore and offshore oil from Chilaw to Jaffna and Jaffna to Trincomalee, said Dharmasiri Weerasinghe, a   specialist in oil exploration, interviewed in 2005. (Sunday Observer. 6.11.2005 p 33). Weerasinghe said that the US Geological survey had found that Sri Lanka had some of the best oil reserves in South Asia. Sri Lanka’s reservoirs of liquid petroleum gas exceed the country’s present needs, he said. When the UN Law of the Sea comes into effect, Sri Lanka will own an even greater extent of the seabed and perhaps more gas and oil.

Ceylon Petroleum Corporation decided in the 1960s,   that the Jaffna Peninsula and the northwest coast probably contained oil and gas, because it has Miocene rocks.  In 1968, the corporation hired a French firm to carry out aeromagnetic and seismic surveys in this coastal strip of 10,500 sq km. These showed encouraging results, especially near Punkudutivu and Mannar islands.

The Geological Survey of New Zealand in collaboration with the Geological Survey Department, Sri Lanka   carried out a gravity survey in 1970. This also indicated that the area around the Jaffna Peninsula, especially Pooneryn, Karaitivu and the   north of the peninsula may have oil and gas. Soviet Russia drilled at Pesalai from 1972-1974. It is alleged that the project was sabotaged.   Foreign oil firms thereafter explored the Cauvery basin, drilling in Palk Bay and Delft. They also explored in the Gulf of Mannar, below the Cauvery basin.

The Gulf of Mannar explorations indicated   significant oil and gas accumulations. TGS-NOPEC (Norway) prepared high quality seismic data for this area in 2000.  The government of Sri Lanka bought this data in 2007 and ocean blocks were offered for further exploration. Since Cauvery basin blocks had been offered in 2003, the total area to be explored became 55, 775 sq kms. In   2011, Cairn India found gas and oil in two wells in Mannar basin, ‘Dorado and ‘Barracuda’ with a potential capacity of more than 2 trillion cubic feet of natural gas. The ‘Dorado’ reservoir would go into production first, hopefully providing 300 billion cubic feet of gas and 2 million barrels of oil. The oil reserves in the Sri Lanka section of the Cauvery were greater than those in the Indian section, observed Weerasinghe.

Geologist Dulip Jayawardene said there may be oil and gas on the eastern shore of Sri Lanka as well. There are secondary deposits parallel to the eastern coast agreed Weerasinghe.  The government has offered six blocks in the Eastern Province to international oil companies to carry out geophysical studies and collect seismic data. Total France has signed an agreement with Sri Lanka to start oil exploration in eastern coast.

The East coast of Sri Lanka is known to be rich in mineral sands. Pulmoddai   has one of the best beach mineral sand deposits in the world. Pulmoddai is located about 60 kms north of Trincomalee, midway between Mullaitivu and Trincomalee.  It is about 10 kms in length with an average width of 100 meters.   It has a very high concentration of heavy minerals.  It is estimated to contain over 6 million tons of ‘heavy sands’ composed of 70-72 % ilmenite, 8-10% zircon, 8% rutile, 0.3% monazite and 1% sillimanite. It has a proven reserve of around 8000,000 to 10,000,000 tonnes of ilmenite, 9,000,000 tons of rutile and 7,000,000 tons of zircon.

The Pulmoddai mineral sands are greatly sought after   because of their very high purity. There is 53% of titanium dioxide in the Ilmenite sands and 95% titanium dioxide in the rutile sands. Monazite has a ‘thoria’ content of 9-10%. This content of thorium is higher than any monazite found in India.  These mineral sands have wide industrial applications. Titanium is regarded as the metal of the future.

In 1980 three other very promising deposits were found along the coastal stretch from Mullaitivu to Nilaveli at Nayaru, Poduwakattumalai and Thevikallu.  These showed a reserve of 2-4 million tons of Ilmenite, 475.000- 700,000 tons of rutile, 350,000-500,000 tons of zircon. An off shore survey along Pulmoddai, from the mean high water mark, covering the entire length of the deposit ,was completed in 1980.  This showed a reserve of 903,000 metric tons of ilmenite, 9500 metric tons of rutile and 39,000 metric tons of zircon.  Around 12.5 million tons of unexplored mineral sands are still available in this area, conclude the  experts.

A copper-magnetite deposit was discovered in Seruwila   in 1973.  This deposit extends to depths of 200 feet at some points  and is estimated to be around four million tons. This is possibly the only major source of copper ore south of Madya Pradesh in India.  Jaffna  peninsula  has is a  very large reserve  of glass sand, covering several hundreds of acres  from near Vallipuram in the north to Ampan in the south. Silica sand  is used in industrial processing,  for  glass, molds, casts and  water filtration stations.  Jaffna may  also possess uranium. Satellite imagery seems to indicate this, said  Jayawardene.

Geologists  observe that there is a potential geothermal belt running from  the north of Trincomalee to Hambantota. This belt extends for over 300km and there are about ten identified thermal springs situated along the line, indicating that a sufficient reservoir of geothermal energy exists in Sri Lanka. Mannar and Jaffna areas are very good for solar and wind on-shore energy  as well. ‘You could get 500 megawatts from Jaffna alone,’ said an official from the Sustainable  Energy Authority.

Portland cement was manufactured in Sri Lanka using the miocene limestone near Jaffna and Puttalam  and the cement clays near Mannar. Miocene limestone occurs in a belt that runs along the Northwestern coast from Puttalam to Iranamadu. These deposits extend to a great depth. Very large reserves of cement clays are available in  Murunkan and other areas.  The  cement factories in Puttalam and Kankesanturai were producing about 500,000 tons of cement per year before the Eelam wars.

Trincomalee and Arugam Bay are popular tourist destinations of the Eastern Province. Arugam bay is considered one of the best surfing destinations in the world. In 2011 it hosted a world class surfing competition.  Trincomalee   has some of the most picturesque and scenic beaches found in Sri Lanka. They include Kuccheveli, Nilaveli, Vakarai, Passekudah and Kalkudah. The beaches are so shallow that one could walk out over a hundred meters into the sea without the water reaching the chest. Trincomalee also offers scuba diving and whale and dolphin watching. More than twelve different species of whales, including blue whales, sperm whales can be seen there.

There is far too much emphasis in the mass media on the entertainment and tourist aspects of the Eastern Province..  Trincomalee for instance is featured in the popular media primarily as a leisure destination.  Trincomalee is much more than that and the public should  be made aware of this.

Trincomalee is one of Sri Lanka most valuable assets. Trincomalee is one of the largest deep water natural harbors in the world. It consists of approximately 2000 hectares of sea and 6000 hectares of land.  The entrance is four miles wide and five across.  The inner harbor which lies in the north covers about 12 sq miles and is securely enclosed by rocks and small islets.   A remarkable feature of this harbor is its great depth.  It has a submarine canyon with walls as high as 1350 cms and a depth of over 3350 meters.  This canyon is one of the 20 largest submarine canyons in the world.

Trincomalee harbor is very strategically located   in the Bay of Bengal. Due its size and depth, Trincomalee can accommodate  ships which need a draught of 25 meters. It can hold over a hundred of them. Trincomalee is a sheltered port unaffected by seasonal weather changes and tidal waves. Therefore it could ensure the safety of a whole fleet during the monsoon. Trincomalee is also ideal for nuclear submarines.  They can dive low in the inner harbor and effectively avoid radar and sonar detection.  The unique geographic position of Sri Lanka makes it a natural aircraft carrier as well.

This has political implications. A fleet so protected is in a position to dominate the Bay of Bengal and the eastern Indian Ocean and   the foreign power owning such a fleet was at an advantage.  Britain’s first possession in Sri Lanka was Trincomalee (1796) and it was the last to go (1957). Currently, it has been observed that Trincomalee can comfortably accommodate the seventh fleet of the US Navy.

Trincomalee port could bring in a huge income from cargo handling, ship repairs and port-related industries. It was unable to do so until now, due to security issues, but even during the Eelam wars, piers were operated by the private sector to deliver cement, also wheat to the Prima flour milling factory. Trincomalee   should be the next port for loading/discharging container ships, after Singapore.  The ports of Bangladesh and Eastern India and Myanmar’s Kyaukpu port could converge on Trincomalee, providing cargo for the super container ships calling there.  India has no ports to match Trincomalee. None of the Indian ports can accommodate large ships. The deepest Indian port is Gangavaram in Andhra Pradesh with 21 meters depth. At present India uses Colombo port. A rail connection thru Dhanushkodi will also help India   send its cargo to Trincomalee.

2 Responses to “THE ECONOMIC IMPORTANCE OF THE NORTH-EAST OF SRI LANKA”

  1. Christie Says:

    Indian Empire wants Trincomalee for its submarenes.

  2. Ananda-USA Says:

    MORE Foreign BORROWING (3.5 Billion USD) to FIX the Balance of Payments!

    We are well and truly FIXED indeed! Do we TRUST these Financial BUNGLERS who allowed Mahendran to LOOT the TREASURY??

    What is they IMPORT MORE Cars for Politicos, allow their pals to REMIT MORE assets to foreign SAFE HAVENS, and BRIBE the government servants with ANOTHER Rs 10,000/mth to win the next Local Govt Elections?

    DEBTS will Balloon on INCREASED CONSUMPTION without building any INFRASTRUCTURAL CAPITAL ASSETS, The rupee will INFLATE through the celing (10.5% inflation in the last 12 mths from Rs 133/USD to Rs 147/USD now) allowing Foreign Bankers and Western Powers to DICTATE NATIONAL POLICY of the Beggared Sri Lankan State!

    New Capital Gains taxes will be added to supplement the increased VAT and the NBT to pay the interest on the foreign debt.

    Do you hear that WOOSHING sound growing into a CRESENDO??

    That, my friends, is the SOUND of money flying out of ordinary people’s pockets to maintain the LUXURIOUS life style of the Yamapalanaya politicians!

    ………………………………..
    Sri Lanka seeking to borrow $3.5 bln through foreign debt

    Wed, May 25, 2016, 08:38 pm SL Time, ColomboPage News Desk, Sri Lanka.

    May 25 (Reuters) Sri Lanka is in the process of borrowing up to $3.5 billion from foreign sources via syndicated loans, sovereign bonds, and sukuk, the country’s finance minister said on Wednesday.

    The borrowing plan comes as the South Asian nation seeks to fix its precarious balance of payments position after a sharp depletion of its foreign exchange reserves – a legacy of massive debt piled up under the previous government.

    “A $500 million syndicated loan is almost done with Credit Suisse. Once that is done, we will be going for another $500 million syndicated loan,” Ravi Karunanayake told a Foreign Correspondents Association forum.

    “Then we will go for the sovereign bond within two to three weeks. We will also go for a sukuk.”

    Karunanayake also said the government has appointed eight banks and four non-banking institutions as the lead managers for the upcoming sovereign bond but did not name the institutions. He added the government may look to sell bonds to Chinese and Japanese investors.

    Sri Lanka is heavily indebted, partly due to borrowing by the previous government during its nine-year tenure that ended in January 2015. It faces a balance of payments crisis with around $2 billion in foreign outflows leaving the government securities market since October 2014.

    The finance minister said the refinancing debt will be used to ease the pressure on the repayment of expensive loans in the past.

    The $82.2 billion economy delayed its 2016 borrowing plan until it reached an agreement with the International Monetary Fund (IMF) for a $1.5 billion bailout to help the island nation avert a balance of payments crisis.

    The island nation has been taking steps to ease the pressure on foreign debt repayment including requesting China swap some of the $8 billion Sri Lanka owes Beijing for equity in infrastructure projects and offering to sell stakes in its companies to Chinese ones.

    It has also planned reforms in loss-making state-owned enterprises while raising taxes to increase government revenue, after repeated requests from the IMF.

    Read More:: Reuters (Source)

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