Following the discovery of natural gas deposits in the Mannar basin in Sri Lanka’s sea off the northwest coast, the government’s plan to call for more competitive international bids for oil exploration in the remaining five blocks faces obstacles from India.
Diplomatic sources said the obstacles had come up due to a delay in establishing a proposed joint information exchange mechanism and the determination of the new maritime boundary with India.
According to the Joint Declaration issued after President Mahinda Rajapaksa’s official visit to India in November last year, it was proposed that early talks be held to determine the new maritime boundary before offering blocks for international bids for oil exploration in the Mannar basin.
Last week, President Mahinda Rajapaksa and Cairn Lanka (Pvt) Ltd, a wholly-owned subsidiary of Cairn India Ltd., announced the natural gas discovery at a depth of 1,354m in the first well that was drilled.
Petroleum Industries Minister Susil Premajayantha told the media they would soon call for international bids to explore for oil in the remaining five blocks.
Diplomatic sources said this call without talks on the maritime boundary issue with India ran contrary to the proposal in the joint declaration made last year.
The Joint Declaration says, “The Sri Lanka side proposed discussions on establishing a joint information mechanism on the possibility of oil and gas fields straddling the India-Sri Lanka Maritime Boundary. The Prime Minister of India assured the President of Sri Lanka that this proposal would receive the Government of India’s attention and the matter could be discussed further between the two sides”.
When asked for comments on the issue, Minister Premajayantha said he was unaware about such
proposal would receive the Government of India’s attention and the matter could be discussed further between the two sides”.
When asked for comments on the issue, Minister Premajayantha said he was unaware about such a proposal made by India last year. However he noted that India was given a block in the Mannar basin to carry out oil exploration, but it had so far not started work.
There was no agreement to exchange details of oil exploration with India and it was only a proposal, he said.
The minister said the Petroleum Resources Secretariat coming under the purview of the President was entrusted with the task of oil exploration and related matters. Sri Lanka as a sovereign country had the liberty to call for international bids for oil exploration, he said.
But he noted that as friendly neighbours Sri Lanka had no objections in exchanging information with India on the progress of oil exploration.
Mr. Premajayantha said the discovery was a great boon to Sri Lanka and the country would be able to utilize its natural gas to produce electricity, LP gas for domestic purposes, urea at lower costs, and also as an alternative fuel to run vehicles.
The minister said the government was optimistic that the project would be commercially successful but it would take 18 to 24 months to start commercial production.
Officials said Cairn had set aside more than US $100 million as commitment towards exploration in Sri Lanka and had already spent about $50 million.
The diplomatic sources said non-consideration of the maritime boundary agreement could cause a serious dispute with India if commercially exploitable oil or gas deposits were located on the Sri Lankan side of the maritime boundary.
The non-resolution of this boundary issue vis-a-vis offshore oil exploration was the main reason why the major international oil exploration companies did not respond to the earlier call for bids although they attended roadshows to promote oil exploration in Sri Lanka.
There are nearly 30 operating wells on the Indian side of the Cauvery Basin, and Calgary-based Bengal Energy has exploration rights for 1,362 sq km there.
Sri Lanka was hopeful that oil exploration would be successful on its side of the field. |
E-mail
