Oil exploration in Sri Lanka draws six bids

The Ministry of Petroleum and Petroleum Resources announced on Thursday that companies have submitted bids for oil exploration for three blocks in the Mannar Basin. Three companies, Cairn India Ltd, ONGC Videsh Ltd. and Niko Resources (Cyprus) Ltd have submitted six bids. Speaking to The Sunday Times FT, the Minister of Petroleum and Petroleum Resources, A.H.M. Fowzie said he will be submitting papers to the Cabinet with the relevant information on the bids to seek permission to appoint a Technical Evaluation Committee (TEC) to evaluate the bids. Fowzie said he expects the recommendations of the TEC to be subsequently referred to a cabinet negotiating committee. Fowzie also said there will be a separate Parliamentary committee to assist the Ministry when required.

Despite the three road shows which were held in September 2007 in London, Houston and Kuala Lumpur after which the Ministry said hundreds of companies had expressed interest in oil exploration in the Mannar Basin, only three have submitted bids. When asked why those companies did not also bid, Fowzie said, "The companies showed interest but only a few companies bid but I don't know why." He also said he did not think the market leaders stayed away due to a maritime boundary problem between India and Sri Lanka.

Fowzie described Niko Resources from Cyprus as being a 'renowned company' and said the bid by ONGC Videsh which is India's largest oil and gas company, 'gives the indication that it is going to be a successful exploration.'

In addition to the Mannar Basin, the Ministry has already mapped out areas in the Cauvery Basin for oil and gas exploration and are asking for expressions of interest from people who would like to divide the block. The minister said tenders will be called for very soon but could not give a specific date. He also said there are plans to conduct seismic studies in the Cauvery Basin.

A press release from the minister stated that it would take three months to finalize the evaluation of the bids. "I believe that we can make a huge contribution for the economic growth and development of our country through the exploration of our own oil," Fowzie said in the statement. "Although attempts were taken for oil exploration in Sri Lanka by the successive governments, this is the first time we moved forward and achieved the success." (NG)