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OIL EXPLORATION WEBSITE SAYS SRI LANKA’S MANNAR BASIN HAS SIGNIFICANT PETROLEUM ACCUMULATIONS

By Walter Jayawardhana

A leading Oil Exploration industry website Rigzone.com said that Sri Lanka’s Mannar Basin seismic data have indicated that the basin has significant potential for petroleum accumulations.

“Seismic data shows one billion barrels lie under the sea off Sri Lanka’s North West Coast,” said the website announcing the island nation’s road shows to be held in London, Houston and Kula Lumpur to present data on three blocks of the basin in the month of September which will be offered for exploration after receiving tenders.

“The Mannar Basin has seen relatively minor exploration activity in the past;” said the website, “however, recent seismic data have indicated that the basin has significant potential for hydrocarbon accumulations. According to the reports by the Government, seismic data shows more than 1.0 billion barrels of oil lie under the sea off Sri Lanka's northwest coast, though no reserves have yet been proven. If proven, the reserves would be a major boost for the country, which produces no oil and imported $2.1 billion worth in 2006.”

The Rigzone.com said, Sri Lanka's Ministry of Petroleum and Petroleum Resources Development will be calling for tenders beginning next month for oil exploration in the Mannar Basin. According to the Minister of Petroleum and Petroleum Resources Development A.H.M Fawzie, three road shows will be launched in September to present data on three blocks in the offshore Mannar basin. The road shows will be held at London, Houston and Kuala Lumpur.

Quoting Minister Fawzie the website added that more than 20 countries including India and China who already own two blocks at the Mannar Basin have agreed to participate in the bid round. The Minister further stated that the Government is committed to conduct a transparent and efficient tender process with exploration licenses being awarded in early 2008.

However, report said that the applicants will have to pay signature bonds and production bonds to the Sri Lankan government. Also they will have to pay a 10% loyalty fee to Sri Lanka during the exploration period.

The permits will be for a period of eight years and will consist of three phases. The permit will be broken up as follows: three years for the first phase, two years for the second phase and three years for the third phase. If additional exploration is needed, a two year extension could be granted.

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