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Sri Lanka to strike oil, gas soon

Sri Lanka is to strike oil and gas as soon as the report on 3 D seismic studies are completed within two months. The study would enable to ascertain how much hydrocarbon deposits are available in the Mannar Basin. It is expected that the first barrel of oil could be extracted by 2013, said Petroleum and Petroleum Resources Development Minister A.H.M. Fowzie at a media briefing yesterday.

Cairn Lanka is commencing seismic acquisition in Mannar Basin with an investment of over US $ 100 million. Bids have been called for the remaining seven blocks and a Cabinet Paper has been already submitted. A production sharing agreement has been signed specifying as to how to share oil, what are the benefits Sri Lanka is to receive and the procedures to follow. Sri Lanka would receive a ten percent royalty on oil produced.

“We are optimistic and investing a great deal of money to drill wells and remain focused on conducting the seismic survey,” said Cairn Commercial Director, P. Elangoven.

It is important to carry out the work program on competitive rates. The availability of oil would depend on the data from the survey subjected to a review and analysis, he said.

Cairn Lanka Private Limited, a wholly owned subsidiary of Cairn India, commenced its 3D seismic survey in the Mannar Basin in Sri Lanka. The program will fulfill the commitment of 1450 km2 of 3D seismic data acquisition and will be acquired by CGG Veritas AS using the seismic vessel ‘SR/V Viking II’. Completion of the data acquisition is expected by the first quarter of 2010 with data processing scheduled to be completed by mid 2010. Drilling, based on the interpreted data and subject to regulatory approvals, is expected to commence in the first half of 2011. Block SL 2007-01-001 was awarded to Cairn India in the bid round held in 2008. The block lies offshore Northwest Sri Lanka. For the Sri Lankan entry, Cairn Lanka (Private) Limited was formed as a wholly owned subsidiary of Cairn India, which now holds a 100 percent participating interest in the block.

Cairn’s Forward Plan includes commencing a Met Ocean and Currents survey in January 2010, complete the 3D seismic acquisition program before the end of April 2010, initiate fast-track 3D seismic data processing and complete same within August 2010, complete final 3D seismic data processing and interpretation by about November 2010, complete all major drilling services contracting by about August 2010, finalize the drilling rig contract before December 2010 and commence exploration drilling (Well # 1) in April 2011.

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