Mannar Basin oil exploration drags on in tender dispute
View(s):Sri Lanka‘s oil and gas exploration process in Mannar Basin including appraisal and development of natural gas discoveries in Block M2 is being dragged into an unknown direction with the cancellation of international competitive bids called in 2019, removing the selected bidder.
This action has been taken by Energy Minister Udaya Gammanpila on the advice of newly appointed advisor to the Petroleum Resources Development Secretariat (PRDS) Saliya Wickramasuriya.
The aim was to recommence oil and gas exploration and also to attract more investors to the industry.
This move has further delayed exploration activities in Mannar basin which has the potential to generate over two billion barrels of oil and over nine trillion cubic feet of natural gas sufficient to fulfill a substantial portion of Sri Lanka’s energy needs for the next 60 years, energy experts said.
In a letter to Presidential Secretary Dr. P.B. Jayasundera, Sealion Power, a consortium led by leading experts in the oil and gas industry in the UK, noted that the PRDS Project Committee (PC), chaired by the Director General of the PRDS, formally recommended the Sealion Bid in 2019.
The recommendation from the PC is reviewed by the Cabinet Appointed Negotiating Committee (CANC). There was then a hiatus in the proceedings until July 27, 2020 when a virtual meeting was held between Sealion and the CANC at which certain clarifications were requested in respect of the Sealion bid.
These clarifications were made by letter dated July 29 and the formal endorsement by the CANC requires the final approval from the PC, the company stated.
The Sealion letter quoted Chair of the CANC, Anura Dissanayake as confirming that he strongly recommended the award to Sealion. He had said that none of the big companies had shown any interest, even during his tenure as DG of the PRDS from 2001 to 2017 when market conditions were much more positive.
The letter quoted Chaminda Hettiarachchi, then Additional Secretary to the Ministry of Energy, as saying the due process had been followed.
After his cabinet appointment, Minister Gammanpila has convened a meeting on November 11 with members of the CANC in attendance.
There Advisor Wickremasuriya was of the opinion that the Government should be attracting the top 10 or the top 20 oil and gas companies from around the world to invest in the sector and that Sealion does not fit into that category.
He submitted a report to the Minister strongly advising the Minister to cancel the process.
At the end of the meeting, the Minister moved that the existing Chair of the PC be removed and replaced by the new DG.
After seeking views of the new DG Surath Owitigama Minister Gammanpila said that he was willing to submit a paper to Cabinet recommending the cancelling of the bidding round and re-commencing the whole process. (BS)