More bidders for Mannar basin

After natural gas discovery :

Sanjeevi JAYASURIYA

The discovery of natural gas will bring along many economic and social benefits to Sri Lanka where high calibre bidders could be attracted for the remaining five blocks. The discovery through the first block drilling is a positive sign for future bidders, Petroleum Industries Minister Susil Premjayantha told Daily News Business.

“The agreement entered with Cairn Lanka (Pvt) Limited covers the discovery of oil and gas including natural gas and there is no necessity to alter the agreement,” he said.

“This is a big success for the country and there are two more blocks for drilling which will commence shortly. However, it is necessary to evaluate the drilling outcome and ascertain the commercial viability of the findings,” the Minister said.

Three out of eight blocks in the Mannar basin were given to Cairn Lanka with 100 percent participating interest. The remaining five blocks will be offered to potential bidders in the near future.

The technical process to ascertain commercial viability of the drilling will take time and currently drilling is carried out in a water depth of 1,354 meters located in the block SL 2007-01-001 at the Mannar Basin.

“The global energy demand is increasing continuously and the discovery will position Sri Lanka as an attractive investment destination and encourage potential bidders for the remaining blocks. The energy focus is shifting from nuclear energy to natural gas the country is at an advantageous position to export the excess after meeting the demand for domestic consumption,” he said.

The Kerawalapitiya and Kelanitissa power generation will boost the national grid supply and with the addition of natural gas as a power source the cost could be reduced in the future. The natural gas is environmentally friendly and carbon emission will be reduced by two thirds where it will lessen the carbon foot print.

“The natural gas unit price will be less than the price of other power sources and it could supplement the transportation sector as an alternative power source. The natural gas could be utilized to produce urea where the subsidy which cost the government more than $ 400 million could be reduced.

The current oil bill of $ 3 billion could be saved partly or fully depending on the outcome of the drilling,” the Minister said.

“The country could experience rapid development and investment flow similar to other oil producing countries in the event it discovers fuel where further drilling is in progress,” he said.

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