Lanka's search for oil begins

SINGAPORE: Sri Lanka is moving forward with its first oil exploration round, with three roadshows planned in September to present data on three blocks in the offshore Mannar basin, the Petroleum Ministry said.

The Mannar basin, off the island's northwest coast, has been little explored but seismic data is encouraging, the Ministry of Petroleum and Petroleum Resources Development said on its Website www.prds-srilanka.com.

"Comparisons have been made not only with systems such as those encountered in the Cauvery and Krisha Godavari Basins in India but other international regions such as offshore southeast Brazil, the Gulf of Suez, Nile Delta and East Kalimantan," the Website said. Two blocks in the basin have been allocated to neighbouring India and China, officials said earlier this year.

Sri Lanka delayed its exploration round from April, which analysts said was because exploration is new to the country, and that the Government must draft rules and regulations and build up sector expertise.

The Government hopes to award licenses by early next year, the Government said on its Website. The Government had said that it aimed for exploration to begin in mid-2008. Roadshows will take place in London, Houston and Kuala Lumpur next month.

The Government says 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.

Oil imports deepen the budget deficit as the Government keeps prices artificially low at pumps to reduce the Cost of Living.

Reuters