Oil exploration; the battle begins

Documents for tenders for offshore oil and gas exploration in the Mannar Basin are to be distributed by end 2007 including during several road shows that have been planned, according to Minister of Petroleum and Petroleum Resources, A.H.M. Fowzie.

He told The Sunday Times FT that tenders will be examined until April 2008 and the contract is expected to be handed over to the successful bidder in August 2008. Out of the eight available blocks in the Mannar Basin, three are up for sale for offshore oil exploration. Two have already been sold to India and China. Fowzie said he is very confident of the estimated figure of one billion barrels of offshore oil which oil experts have also concurred with him. According to 2D surveys of the area, Fowzie said the data has been interpreted by experts who have confidently concluded the existence of oil and gas deposits.

But an expert on oil exploration told this newspaper that the Norwegian company which the minister refers to is the controversial TGS NOPEC who received US$8 million from the Sri Lankan government to hand over data from 2D seismic surveys it conducted. The expert further added that the claim of one billion barrels is unsubstantiated since there is yet to be 3D seismic surveys conducted in the area in question.

The expert also added that regulations under the Petroleum Resources Act have not been framed or finalized and it is unknown as to what stage the Production Sharing Contract (PSC) is at. However, Fowzie contended that the PSC has been drawn up and that once it is handed over to the companies interested in offshore oil and gas exploration, the profit sharing, part of the PSC, is what the companies will have to offer.

The contract will subsequently be awarded to the highest bidder. Fowzie also added that the regulations under the Petroleum Resources Act have been finalized.